There are many types of properties on the market ranging from condos to commercial buildings to detached homes. Within these, however, there are different sales to sort through as well. Most people know about the basic sale and foreclosures, but there are short sales, too. A short sale can take months to be approved, but its benefits are often worth the time.
How a Home Becomes a Short Sale
Like a foreclosure, short sales occur because the owner can no longer keep up with their mortgage payments. The house, however, has not been delinquent long enough for the bank to take it back. Instead, the owner and the bank must reach an agreement that the house can be sold for less than the mortgage balance. While it seems like the bank is taking a loss, it actually benefits them as well. The bank will not need to maintain the property and list it for sale, which can be costly. The seller may need to pay back the excess mortgage in a method agreed upon by the bank, however, their credit score is not ruined. This gives him the opportunity to get back into a house faster.
Short Sales and the Buyer
Most buyers are drawn to short sales because of the price. The homes are often in need of repair of some sort. If you are extremely lucky, these will be only cosmetic. If the short sale goes through, though, you are getting a significant price on the value of the home. Once changes are made, the value normally jumps up and can create a high profit. Short sales are ideal for flippers or DIY families who want space they otherwise cannot afford.
Advantages and Disadvantages of Short Sales
The biggest drawback, as a buyer, is that a short sale takes time to be approved. It is not suggested to put an offer in on one if you want to move quickly. A fast short sale may go through in approximately six weeks, but these could go out months. Banks put attention onto these properties last since it is not a moneymaker. Other notes to consider are
Lower offers usually not accepted by bank
Inspections not always allowed
Offers can be placed on other properties while waiting
Homeowners are cooperative
Financing options may be better
If you are interested in buying a short sale property ensure you do your research. You should check the background of the house including when it was last bought and the amount owed. This gives you a good idea of how much the house is actually worth. More than anything, though, you need to have a realtor who specializes in short sales. David Person with Colorado Homes Connection is a short sale specialist who can help you navigate this tricky process. Contact him today at 720-854-9501 with any questions, to start your search, or find out how to list your house.