There are many homes for sale today—in some areas as much as 50% of the properties fall under “distressed properties.” These may be homes that have received foreclosure notices and are for sale as “Short Sales,” or have already been foreclosed on and are owned by the lender.
In a Short Sale, the homeowner can no longer afford to maintain the mortgage, but the lender has agreed to have the property sold for less than the amount owed on the loan.
Sales of this type are much more complicated than the traditional Buyer/Seller Transaction.
This includes much more paperwork, mostly from the Seller’s standpoint. From the Buyers point, these sales take much longer to come to fruition due to the lender’s involvement and acceptance.
However, if you understand the possible pitfalls involved in purchasing a distressed property—you may be able to purchase a great home for a great price!
With historically low interest rates, a surplus of homes on the market—this is great time to buy a home.
Is a distressed property for you?
Firstly, you’ll be dealing with a highly motivated seller. In a short sale, a seller who is in financial trouble and very interested in getting out of a mortgage. In a foreclosure you will; be dealing with the Lender.
These types of sales take much of the emotion out of the process. You won’t be insulting anybody, if you make an offer that’s lower than the asking price. But, be aware that doesn’t imply a low offer will be accepted.
Lenders are extremely interested in getting these homes sold and off the liability side of their balance sheets. Bidding wars have occurred on some reasonably priced foreclosed properties.
In a short sale, since the homeowners want to get the home sold quickly, they are more likely to keep it well-maintained and in good move-in condition unlike a foreclosure.
The transaction process for short sales often takes longer than for traditional transactions. In many instances it can take a minimum of 90 to 180 days to get the lenders approval for the short sale.
It’s oftentimes not clear which lending institution actually owns a mortgage. In many situations of 1st, 2nd, and possibly 3rd mortgage loans, must be negotiated between lenders as to the amount each will recoup from the sale.
If you have any questions regarding buying or selling short sales, let me know.
Azure Realty Services, Inc.