What is a short sale? It’s a transaction in which the bank allows a homeowner to sell for less than the mortgage balance owing on the house. Because the bank is releasing the homeowner from their debt, and is therefore taking a loss, the bank negotiators have the final say regarding the price and terms of the sale.
There’s no doubt that short sale listings are priced a bit lower than non-distressed listings, but if you’re in a hurry to own a home, there’s no sense in wasting your time with them.
Remember that buying a short sale listing involves gaining acceptance from two parties, and the second party has no incentive to move quickly.
First the homeowners have to accept your offer.
Then it goes to their lender for approval. And getting an answer can take two or three months – or even longer. So, you’re stuck in “wait” mode until the listing agent hears from the bank. Even then, the bank may make demands that the seller can’t or won’t meet, so negotiations could go on for several more weeks, or even months.
If the house is listed with an experienced short sale listing agent, your offer will be in a better position for a faster reply. That’s because they will have prepared and presented the request package correctly the first time – and because they know just how often to prod the bank negotiators to get them moving.
If the listing agent doesn’t have the experience – you could be in for a 3 or 4 month wait before you hear their terms of acceptance, or their rejection. And, if the listing agent is not experienced in negotiating with the banks, the house may well go into foreclosure before an agreement is reached.
So, the first requirement of a short sale buyer is patience.
My advice: If you’re in no hurry and want a bargain, include short sales in your home search. If you are in a hurry, pass them by.
P.S. If you’re in a hurry to start the search, call me today!