Should I Buy a Short Sale Home?

 

 

Video Summary

Should you buy a house that is going to be short-sold, or a short-sale house? Well, short sale means that you are purchasing the property for less than what is owed to the lenders, whether it has a first mortgage and a second mortgage or just a first mortgage. Well, you need to do your homework whenever you’re buying a property that is in a short sale. The owner of the property is the one who enters into the contract, and then there’s an addendum that says that this contract is contingent upon the lender approving the sale.

So, it is not that you’re purchasing it from the lender; you just need to have the lender approve the sale. They usually go through the process of sending out someone to look at the property, which is called a BPO – a brokerage price opinion – to determine that the price that you’re paying is about what the property is worth, to approve the sale. This takes some time, and you have uncertainty whenever you’re dealing with short sales in that you don’t whether the lender’s going to approve it. It takes sometimes months to determine whether or not the bank will approve it; if they take other contracts. You don’t have any certainty that they’re going to approve your deal, and so you need a healthy dose of patience.

Once the bank does approve the short sale, then they want to close yesterday, or give you a very short time period. This presents a problem if you’re going to go through a bank or FHA in order to finance the home. You can start to process and get it all ready to go, but you don’t have an approved contract. So, then your appraisals and all the expense involved as far as getting financing is concerned may be outdated by the time they approve the contract. Or, if you turn around and wait until your contract is approved, they’re going to want to have the transaction closed within a 30-day period, which may present a real problem as far as getting your appraisals and everything done by your lender in time to close on the short sale agreement.

So, you have a lot of uncertainty in dealing with short sales, although you usually get a very good deal. Remember, though, that you need to do a good job researching the property because the person who’s selling the property probably does not have the money to pay you for any damages you might be incurring as a result of their failure to disclose any defects about the property. So, you should have the property thoroughly investigated as far as that’s concerned. So, if you’d like representation in conjunction with a short sale, please give me a call at (727) 847-2288. Thank you.