A Buyer's Guide to Short Sales
By now I’m sure that you have heard plenty of stories about short sales, and how they should really be called ‘long sales’. You may have even written an offer on a property that is in a short sale situation, only to be disappointed by the amount of time you had to wait for an answer.
Well, some of what you are hearing is true. There is a longer wait to have an accepted offer with a short sale. The owner of the property can accept your offer right away, but the offer is not binding until the lender gives the final approval. The wait for bank approval can take anywhere from 2 weeks up to 9 months, or more!
This does not mean that you should avoid all properties that are in a short sale situation. Your Buyer’s Agent can do a little bit of leg work before you decide to dive in with an offer. A call to the Listing Agent is a great place to start. Your Buyer’s Agent can ask a few questions like:
- Has the Listing Agent ever done a short sale?
- Are there other offers?
- Has the bank given approval for a short sale, or do they need an offer before giving that approval?
- Has the bank given a time-line as to how long they expect approval to take?
- How many lenders are there? (if there is more than one lien holder, that will slow the process)
Although there may be a longer wait, there are a few benefits to purchasing a short sale property. You can usually buy the home for a discounted price, and you can get away with a lower earnest money deposit as well.
Two more bits of advice: Be sure to include the Short Sale Addendum to the Offer (SSO) when drafting an offer. There is specific verbiage in the SSO that addresses the issue of bank acceptance and deadlines for inspections & earnest money. You should also try to set your closing date for 45 days after the date given for bank acceptance. This will give you enough time to get your home inspection completed. Remember that the sellers usually do not have extra money for repairs that come up during your inspection, you could be purchasing the home as-is. Some buyers chose to do the inspection prior to bank approval to avoid last minute surprises.
As always, if you have questions or need help buying or selling, give us a call! The Kuchta’s - Kelly & Colleen 262-894-6512 or www.thekuchtas.shorewest.com
Posted by:
Colleen Kuchta
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