As a home buyer looking in the market, you are probably familiar with what a typical sale looks like. You probably also have a basic understanding of what a foreclosure is and how it will work. However, something that is a little bit less understood would be the short sale. While they are not as popular in the market, you may come across a few and you may even fall in love with a home that is a short sale. So, what does this mean for you as the buyer? These are the basic facts that you need to know about these homes and the process for purchase.
What Is A Short Sale?
A short sale is something that happens when the lender for the current mortgage of the owner agrees to a smaller mortgage payoff amount. This means that they will be taking in less than what is owed on the property in order for it to sell on the market. This usually happens when the current owner of the property, the seller, is currently in a distressed state. This would result in something such as not having the ability to pay their mortgage or the owners going through a divorce and wanting to unload the property as soon as possible.
How Does It Work for The Buyer?
When it comes to purchasing a short sale property, the process is not much different than purchasing a home that is simply on the market. Getting a mortgage is the same process. However, before you put in an offer on the home, you will likely need to be preapproved or prequalified before your offer can be accepted. This is because the lender wants to make sure that you will be able to complete the purchase, especially with this type of situation. The one other major difference is that the process is a lot more drawn out than if you were purchasing a traditional home. Even though it is called a short sale, it is not something that happens very quickly. In fact, it can take anywhere from 2 to 4 months on average in order for a short sale to be approved and for the actual closing to take place. If you are considering this option, you will need to leave yourself with plenty of time.
Now that you understand the basics of a short sale and how it works, you can decide if it is something that you want to deal with. However, if you do find a home you love, you should not let something like a short sale stop you from getting it.
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