A short sale is when a home is sold for less than what is owed to the bank by the current owner. A short sale can only occur if the lender or lenders agree to release their lien rights to a property in exchange for proceeds from the sale which are insufficient to cover the total remaining balance of the mortgage. Even under the best of circumstances, buying a short sale property will usually take longer than a typical real estate transaction. Be aware that most short sales will not close in the customary 30 days or less. Remember that you're not only having to get approval from the seller, but the lender must also agree to the discounted price. Commonly, your offer will be reviewed by several processors, an asset manager and ultimately the mortgage loan investor for approval which will add time - sometimes even 2 to 3 months.
Are foreclosures and short sales a bargain?
It's sometimes presumed that any foreclosure or short sale must be a good buy and a possibility for easy money. This isn't always true. You have to be prudent about buying a bank owned home or short sale if your only intent is to make money. While it's true that a bank is often eager to offload their inventory promptly, they are also looking to minimize any losses. There are many short sale or foreclosure opportunities which have the potential to make money, and many of our clients do very well buying and selling foreclosures. Still, there are also many short sales and foreclosures that are not good buys and not likely to turn a profit. When pondering what to pay for a bank owned or short sale property, we will help you carefully analyze comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling.