Homes for short sale are packaged as wonderful deals. Closing the deal nonetheless , is no walk in the park. The process is more convoluted than a normal property purchase. How long it goes is outside your control. There's no guaranteed way to win the lender's approval. And it would require more from you than you expect. These are some important points (and risks) to consider before pursuing homes for short sale.
Negotiations take time
With homes for short sale, there are no fixed time tables. Negotiations can be slow. If you are pushed for timeâ€"looking to close before a particular date, tied to a loan that is going to expire or your current lease will be up soonâ€"a short sale would possibly not be the best idea. Otherwise, be ready to wait it out. The process can stretch for months, half a year or longer. You might find it simple to reach an understanding with the homeowner but it takes a while for banks to approve homes for short sale . When only one mortgage is involved, the loss mitigation dep. spends 30 to 60 days reviewing the offer before handing an endorsement. But if there are more than 2 mortgages with different lenders, brace for at least 3 months or longer.
Lenders control the clock
Your mortgage company ultimately sets the pace with homes for short sale. While you'll need to wait months to hear from them, when they grant approval, lenders need you to settle swiftly. Many require that the payment be made in less than 30 days. This is the reason why it's important to have your financing in order from the get go. Or else the short sale would be re-approved and you will find yourself back at square one.
Charges may pile up
Lenders are all about minimizing loses and will avoid shouldering any costs from homes for short sale. The costs so falls on the buyer.
Between the day the short sale package is submitted and the day the short sale is approved, fees such as property tax and HOA accrue. When the process stretches longer than expected, the costs pile up far more. The bank is sometimes the root of delay but all of the additional charges run up because of it will be added to the buyer.
You must also set aside funds if more than one mortgage company is involved in the deal and the parties do not reach a contract. Say the 1st mortgage company has approved the short sale on the grounds that $2,000 will be paid to the second mortgage company. But the second mortgage company demands for $5,000. Should the first mortgage company refuse to pay the $3,000 balance, the buyer is forced to shoulder this simply to sign the deal.
What you see is what you get
Make room in your position for house repairs as well. As owners of homes for short sale are customarily cash-strapped, it's likely that they've been holding off on repair work. Some repairs may not have been finished or completed sloppily. Or worse, there could be untreated termite issues. Therein lays the catch with homes for short sale. Often , purchasers are asked to take the property as is and with no guaranties. Should this be the situation, allot time to conduct a rigorous analysis of the home interior and grounds to get a rough guess on how much you'd need to pay for repairs.
There are no guarantees
Regardless of how close you are to closing the deal, a number of things can still go bad when purchasing homes for short sale. No assurances are provided. The homeowner could all of a sudden back out upon taking an attorney's information to file bankruptcy. Or you might find the mortgage company has introduced changes in the contract that you are not in agreement with.
Buying homes for short sale needs work. It demands patience and persistence. Purchasers need to be pleased to hang in there, determined to see this time-consuming and complex process through. But do not worry, with the potential discount you can get from homes for short sale, it'll all be worthwhile in the end.
Negotiations take time
With homes for short sale, there are no fixed time tables. Negotiations can be slow. If you are pushed for timeâ€"looking to close before a particular date, tied to a loan that is going to expire or your current lease will be up soonâ€"a short sale would possibly not be the best idea. Otherwise, be ready to wait it out. The process can stretch for months, half a year or longer. You might find it simple to reach an understanding with the homeowner but it takes a while for banks to approve homes for short sale . When only one mortgage is involved, the loss mitigation dep. spends 30 to 60 days reviewing the offer before handing an endorsement. But if there are more than 2 mortgages with different lenders, brace for at least 3 months or longer.
Lenders control the clock
Your mortgage company ultimately sets the pace with homes for short sale. While you'll need to wait months to hear from them, when they grant approval, lenders need you to settle swiftly. Many require that the payment be made in less than 30 days. This is the reason why it's important to have your financing in order from the get go. Or else the short sale would be re-approved and you will find yourself back at square one.
Charges may pile up
Lenders are all about minimizing loses and will avoid shouldering any costs from homes for short sale. The costs so falls on the buyer.
Between the day the short sale package is submitted and the day the short sale is approved, fees such as property tax and HOA accrue. When the process stretches longer than expected, the costs pile up far more. The bank is sometimes the root of delay but all of the additional charges run up because of it will be added to the buyer.
You must also set aside funds if more than one mortgage company is involved in the deal and the parties do not reach a contract. Say the 1st mortgage company has approved the short sale on the grounds that $2,000 will be paid to the second mortgage company. But the second mortgage company demands for $5,000. Should the first mortgage company refuse to pay the $3,000 balance, the buyer is forced to shoulder this simply to sign the deal.
What you see is what you get
Make room in your position for house repairs as well. As owners of homes for short sale are customarily cash-strapped, it's likely that they've been holding off on repair work. Some repairs may not have been finished or completed sloppily. Or worse, there could be untreated termite issues. Therein lays the catch with homes for short sale. Often , purchasers are asked to take the property as is and with no guaranties. Should this be the situation, allot time to conduct a rigorous analysis of the home interior and grounds to get a rough guess on how much you'd need to pay for repairs.
There are no guarantees
Regardless of how close you are to closing the deal, a number of things can still go bad when purchasing homes for short sale. No assurances are provided. The homeowner could all of a sudden back out upon taking an attorney's information to file bankruptcy. Or you might find the mortgage company has introduced changes in the contract that you are not in agreement with.
Buying homes for short sale needs work. It demands patience and persistence. Purchasers need to be pleased to hang in there, determined to see this time-consuming and complex process through. But do not worry, with the potential discount you can get from homes for short sale, it'll all be worthwhile in the end.
About the Author:
Kendra Chui is a short sale expert in California helps house owners get short sale approved with cash back
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