Short sales can sometimes be bargain deals. But many buyers may not be ideal candidates for a short sale. Basically a short sale buyer should have little or no contingencies. Like a house sale contingency, or a mortgage approval contingency.
Also short sale buyers must be patient, because, there may be months of delay before the sale is approved by the seller's lender Can the buyer afford to have their escrow moneys tied up? And then what happens when their offer is rejected by the lender?
Additional funds may be required for a home inspection, and the home may need additional repairs before it can be inhabited. It is not unusual for the utilities to be shut off, so the buyer would have to pay to have the utilities turned on, then have the home inspection, and then have the utilities shut off again. This becomes a special problem in the winter when water is shut off to prevent pipes from freezing, because the buyer would have the additional expense to hire a plumber to re-winterize the house. Perhaps the home inspection shows some expensive building or mechanical flaws. What happens now...move on or make a commitment to the purchase?
A buyer must answer yes to all the following bullet points if they wish to participate in a short sale.
Is the buyer pre-approved for a mortgage?
Will the buyer be able to lock in an interest rate to closing?
Can a cash buyer show proof of funds?
Will a reasonable offer be made by the buyer?
Lender approval may take several months, is the buyer flexible as to closing dates?
Will the buyer spend money on a mortgage application?
Will the buyer spend money on home inspections (home, mold, radon,etc.)?
Will the buyer spend money on attorney fees?
If any one answer is a no, then the buyer should look at homes that are not short sales. There are still some good deals to be had. After all short sales and foreclosures are keeping convention home sale prices lower.
Recent Comments