What Is A Short Sale Property

October 20, 2011

General Short Sale Info

short saleA short sale property is a home that being sold for less than the current amount owed to the mortgage company or lender. A home is normally sold in a short sale if the owner is no longer able to pay their loan which can be caused by various reasons. These can include, death, health concerns, divorce, job loss, etc. These reasons are always extreme life changing reasons that can vary between lenders. The lender must always approve the short sale, the owner can never choose to sell in a short sale without the approval of their lender because they always have final say.

A short sale is also an alternative to foreclosure and carries fewer negative consequences. Lenders would prefer to sell a home in a short sale rather than foreclose in the current housing market. Banks are sitting on many properties they are having difficulty selling and taking a small loss for immediate gain is an attractive offer. It’s also better for the seller but they would need to be proactive about the process because it can be time consuming. Getting started as early as possible is the best decision a seller can make if they are considering a short sale.

You can find more about short sale vs foreclosure on this page.

Buying a short sale will be similar to purchasing a property in the traditional manner but with slightly different terms. The person selling the property will always need to get final approval from their lender so this can slow down the process considerably. The process can be very long at times with many setbacks but if you have the patience to work through the complications you could walk away with a nice property with a hefty discount.

Another way that short sales differ from the traditional is that these properties are sold ‘as-is’ meaning that any repairs or concerns about the property that emerge will generally not be given attention. Major concerns will normally be addressed but the smaller items that would normally be taken care of will be left up to the buyer to handle. This is one of the costs of buying a short sale property. This is not always such a bad thing considering someone selling via a short sale will still be living in the property ans thus maintaining things as opposed to a foreclosure where the owners may trash the place before being evicted.

Overall short sale properties can be very enticing due to the discount but you need to be extra cautious and be prepared to wait a long time for the process to complete. Banks can be fickle with the price and some sellers might try to entice potential buyers with a lower price point before getting approval on that price from their lender. This can cause a huge delay if the bank never approves a price. Always have a complete inspection done and hire an agent who specializes in short sales which can help avoid any of the pitfalls that normally come up.

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