Buying a Short Sale
Posted by Paul Caparas on Tuesday, December 2nd, 2008 at 2:34am.
I have been meeting many Buyers thinking a Short Sale is the same as a Bank Owned Foreclosure (REO). Well, it is not. A Short Sale is still owned by the current owner but is in Notice of Default and currently negotiating with the Lender on doing a Short Sale so the home won't get Foreclosed on. Also by meaning Short Sale, it's the Lender willing to let the sale of the home at a certain price even though the current owner owes more than that price. Short Sale can also be referred as Short Pay.
Now buying a Short Sale. Sometimes Short Sale can get confused with the home selling fast. Actually the Short Sale process can take months for it to Close Escrow. You asked why!?! Well the Lenders are currently just swamped with requests on Short Sales. Also during the whole Short Sale process, the Lender looks at the current owners financial situation and orders a BPO (Broker Price Opinion) which basically is an appraisal. So basically, if you want to make an offer on a Short Sale, on average it can take up to 45-60 days just for a response to your offer. Not only that, you can wait the 45 days and the response to your offer can be the Lender not approving the Short Sale so you wasted your time.
But if the Lender Approves the Short Sale, then the rest of the transaction is just like a traditional sale. You do your inspections, get your disclosures from the seller and have contigencies. Also a few things that I should let you know, it is usually SOLD AS IS with no request for repairs and the seller won't pay for Termite repairs if needed.
There are some Listings on the MLS that you see that says Short Sale Approved. That means the Lender Approved a price to sell the home which is good news for buyers because you don't have to wait the 45-60 days for a response to your offer. You might have wait a week or 2 but it may be worth waiting for.
Aren't Short Sales a good deal? Sometimes. Remember the Lender gets a BPO so they know how much the home is worth and they don't want to give away the farm. But if you are the only offer for the home, there is a good chance on getting a great deal.
From my experience, I helped buyers buy Short Sales and some buyers waste their time with them. In my opinion, the best way to approach on Buying a Short Sale is if you found a home you love and it is a Short Sale, make an offer but continue to look at other homes. From what I was told, only about 20% of Short Sales Close so which means it is not a guarantee you will get the home. Even if you offer at or more than the asking price, it doesn't matter. It is up to the Lender because they might make more money selling it themselves.
If you have any questions about Short Sale, please contact me.
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[...]the Lender has the final say on how much the home will sell for, not the Seller. My Buying Short Sale Blog Bank Owned Seller - The Bank took over the home and can be also be seen as a[...]
Posted on Wednesday, April 8th, 2009 at 2:09 AM.