Buying a Short Sale: Is it Worth It?
Although the real estate market has been rebounding nicely in many parts of the country, it’s still not uncommon to see listings for foreclosures and short sales in many areas. Most people understand what foreclosures are, but what about short sales?
What Is a Short Sale?
With a short sale, homeowners find buyers and then present offers to their lenders in an attempt to escape from mortgages that are underwater (which means that they owe far more than the home is worth). Banks sometimes agree to accept less than what is owed because it may be cheaper than allowing a home to go into foreclosure.
Going for the Lower Price
If you’re in the market for a new home, you may be tempted by the low prices you’ve seen for short sales. To be sure, it’s possible to get an amazing deal by purchasing a short sale property. Unlike many foreclosures, short sale homes usually haven’t been abandoned, and they’ve often been properly maintained. In other words, you’re less likely to have to pour a lot of money into one after purchasing it.
Consider the Downside
Here’s the rub: Everything hinges on the approval of the bank, and that’s by no means guaranteed. Even if a real estate professional tries to assure you that it will work out, proceed with caution.
Before getting your heart set on a short sale property, consider a few things. How long are you willing to wait? On average,short sales take around six months to go through. What will you do if it’s not approved? You could easily wait six months or longer only to find out that the bank has rejected the deal, which would leave you back at square one. Short sales aren’t practical options for people who need to move quickly. If you have a home to sell first, you should probably cross short sales off your list. They are just too unpredictable.
Patience Is a Virtue
You may be in a prime position to make an offer on a short sale if you can be flexible about when you move. For instance, if you live with relatives or are on a month-to-month lease, you may be able to sit tight and wait it out. With short sales, patience is crucial. Many folks have been able to secure incredible deals by simply being patient and rolling with the punches. If that sounds okay to you and you’ve run across a really amazing deal, go ahead and throw your hat into the ring.