If you are planning to buy a short sale home in order to get a good deal, you need to have two things in abundance — patience and understanding.
First, you need to understand how the buying process works with short sale properties, because it’s different than a regular real estate transaction.
You also need to pack your patience, because the process of buying a short sale can be a long one. The process also varies from one state to another, and even from one lender to another. So you don’t always know what to expect.
What Is a Short Sale?
In simple terms, a short sale is a technique used to sell a home for less than what the homeowner owes on the mortgage loan. The homeowner’s lender agrees to accept less than the full amount owed to them, in order to sell the property (and possibly to avoid a foreclosure). So a quick sale is the ultimate goal of this process.
How Long Does It Take?
The short sale process varies from state to state. In fact, the process can even vary from one home to another, depending on the lender that is involved. One real estate agent who specializes in short sales referred to it as a “box of chocolates” (a tribute to the movie Forest Gump), meaning you never know what you’re going to get. Buying a short sale is typically less predictable than a regular real estate transaction.
Some agents pride themselves on their ability to facilitate short sales quickly, and they market themselves as experts in the process. While it’s true that some agents understand the process better than others, the final completion of a short sale depends on many factors beyond the agent’s control — including the lender’s efficiency, workload, and willingness to cooperate!
The key reason for this complexity (and the lag time that often results from it) has to do with the number of parties involved. When you buy a home through a traditional real estate transaction, your offer simply has to be approved by the seller.
But when buying a short sale home, your offer might have to be approved by several parties — the company servicing the loan, anyone who has invested in the loan, and perhaps even the mortgage insurance company. Basically, anyone with a corporate responsibility or financial interest in the loan has some degree of input. It can get convoluted.
You must also consider that, in a short sale, the lender is generally accepting less than the full amount owed to them. So they will exhaust their other options first before that comes to pass.
Knowing What to Expect is Key
If you are serious about buying a short sale home, you should find out exactly how the process works in your state, and perhaps even seek the help of a real estate agent who specializes in the process. By knowing what to expect before you get into the process, you could avoid a lot of frustration.
Buyers who don’t understand the process often become frustrated and disenchanted with it. They expect everything to go smoothly and are baffled by long wait times. You have to go into the process with your eyes wide open, and with a good understanding of how it works. Patience and understanding. Those are the two most important qualities when buying a short sale.