In the MLS, short sales look like other listings, their asking price maybe lower than comparable properties.
This transaction may take longer to complete and the term short sale has nothing to do with how short the sale really is.
The buying process is similar. You still apply for financing the same way, and order inspections the same way. But complications in the selling process aren’t uncommon, and you’ll need patience.
Good news for buyers: Many banks have made it much simpler and less time consuming for buyers and sellers and have streamlined their process.
Possible short sale hurdles:
Second mortgages: A second lender may not agree to the terms set between the primary lender and the seller.
Mortgage insurance: If the seller has mortgage insurance on their loan, the mortgage insurance company will need to approve the short sale.
Other liens on the property: Liens pose hurdles whether the transaction is a short sale or not, and will have to be addressed before the property can be transferred to a new owner. A lien on the title of the home can be claimed by an outside person or company that the seller owes money too.
Government-backed loans: The government will need to be involved in the approval process. If the seller’s loan was a government-backed loan, such as an FHA loan, it may cause hurdles and delays in the process.
HOAs: HOAs can present complications because the lender might not pay fees associated with the HOA transfer from the seller to the new owner which will fall on to the new buyer list of costs.
A checklist for buyers if you are interested in short sales?
- Get pre-qualified for a mortgage.
- Get a home inspection, but understand that most lenders will sell only “as is.” The inspection can help you decide whether the short sale price is reasonable or if the repairs needed will sway your decision to purchase.
- Make sure you know who is paying the agent’s commission and whether you have to make up any differences to your agent.
- Present all documents to your lender when needed to keep the process running smoothly, have patience, and remember that banks are getting much quicker with the short sale process.