The term short sale is pretty common in the housing industry but not many know the details behind the process of listing a home for short sale unless it’s necessary. It’s typically not a situation you want to find yourself in as homes are listed via short sale when the homeowner can no longer afford to make the mortgage payments. It’s a good idea to have some general knowledge of short sales even if you don’t plan on listing your home that way because as a prospective buyer, you might find a home you want to purchase that is listed as a short sale and having knowledge on the process can be helpful.
What Is a Short Sale?
When a property or home is sold and the profits will be less than the debts against the property. In order for a short sale to be successful, all lien holders must agree to accept less than what is owed on the property.
Short sales can typically take quite a while to complete due to the financial obligations and paperwork so it’s not something to consider if you are looking to buy quickly. If you are planning to purchase a short sale home, you want to do your research before moving forward with the deal as it will take quite some time and you want the property to be worth the money as well.
Short Sale Process
Depending on where you plan to purchase, the regulations will differ but there are some basic steps that are consistent from state to state. The first thing that happens is the short sale package is submitted to the lender along with their financial records. Next, the offer needs to be accepted and proof of funds submitted. Last, the bank will review the information and approve or deny the sale; this is typically the longest part of the process.
Once the sale is approved, the contract needs to be finalized and the terms approved by the lender. The details of the contract will typically state that the home will be sold in its current state without any imperative repairs. It’s also important to make sure the lender is okay with working on a short sale purchase.
Because the short sale process can be somewhat complicated, it’s a good idea to work with a realtor experience with the buying and selling of short sales. This ensures you are following all guidelines and they can help you find homes in a niche market that meet your requirements. Once you find a home that you’re considering purchasing, that doesn’t mean you should stop looking at other options. These types of deals can take an extensive amount of time or fall through so it’s always a good idea to have a backup plan. There are a lot of aspects to consider when it comes to buying a short sale home. The price is typically lower than the average market which is great for buyers but it can also be time consuming with more roadblocks along the path than a conventional sale.
Contact Us Today!
We know that the process of buying a home listed as a short sale and securing funding can come with a lot of questions and concerns, but we want to do whatever possible to make sure the process is as stress free as possible. Don’t hesitate to reach out Family First Mortgage in Lafayette today!