You may have heard the term short sale out there in reference to a home that might be for sale. What is a short sale? A short sale is a transaction in which the seller owes more on the property than its current market value. The “short” refers to the fact that the seller has to get their mortgage holder to agree to take a “short” payoff.
If you need to move in 30 days a short sale is not the right property for you. Short sales typically take anywhere from 30-90 days to get approval from the seller’s lender. Once the approval comes it can be another 15-30 days before you can close. So if you are in a hurry you might want to skip these types of properties.
If you are not in a particular rush and have the ability to be patient while the seller’s agent works the the seller’s lender to negotiate your offer you have a greater chance at success in this type of transaction.
Some of the other factors to consider when considering the purchase of a short sale are:
- Does the seller have more than one mortgage on the property?
- If there is more than one mortgage are the with the same lender?
- Who is the listing agent and has that person sucessfully closed a short sale?
- Are there any liens on the property?
The key here, and I can’t stress this enough, is that these transactions take time. You can get a fantastic deal, but you have to be willing to wait for it.