Home Buying Guide|
Short Sales...What are Short Sale Homes?
Short sales are completely different that foreclosed homes. Unlike a "foreclosed" home where a bank or entity
owns the property after taking it back due to non-payment, a short sale home is offer for sale by the homeowner.
When a homeowner is selling their home
as a "short sale" it means they are "hoping" that their mortgage lender will settle for less (at closing) than what their
current principal mortgage balance is.
As a buyer you need to know:
The seller is likely trying to avoid foreclosure by offering their home as a "short sale". At the
point that the seller (homeowner) puts them home up for sale as a "short sale", they most likely do NOT know if their mortgage lender(s)
will authorize the sale. Homeowners have to prove a "hardship" to their mortgage lender and if they cannot do so to their
lender's satisfaction, no sale! As a result, if you (as a buyer) opt to put an offer in on a "short sale" home, you really don't know if the property will
be able to be sold in this manner. In fact, many homes offered for sale in this manner are not successful and never close leaving the interested buyer(s) back at square one.
You really need time and patience if you are going to pursue short sales. If you don't have alot of time to wait (months) then
it is probably not for you. The reality is that you may not hear anything for a matter of months...possibly even 4 or more months. After a long
wait, if the seller is approved for the short sale, you may get a counter offer or the seller's mortgage lender
may ask all the interested buyers to submit their "final and best" offer. If this occurs, it will extend the process
If the seller (homeowner) has more than one mortgage:
Another situation that can put a wrench in the works for you as a buyer is if the seller has more than one mortgage to
settle. This could extend the process substantially as it will be necessary for them to negotiate with 2 mortgage lenders.
The additional complications with this scenario may even prevent the short sale from being settled.
For you as a buyer, this may mean no sale after many months waiting.
The asking price is too good to be true!
You've scoured the Internet looking for that bargain and *poof*...you find a "short sale" home that is priced so low you can't believe it. You might be thinking
that they will come down even farther. Time to snap back to real estate reality because if it sounds too good to be true it probably is.
Often times real estate agents will list a short sale house for quite a bit below market value to increase interest and create a "bidding war".
When this occurs, the property often will have multiple offers (sometimes a dozen or more)...some of which will be over asking price. The
philosophy behind this strategy is to get the best offer (price and terms) on the table.
So, it's decision time...how much do you want this house? The fact is
if you submit an offer lower than asking price when there are multiple offers you probably won't get the house. And no,
they won't pick your offer out of the pack and "counter" it...unless you are offering all cash...in that case they might
but don't count on it. So, what is the best course of action? It all depends on the situation but now is definitely
the time that you'll need the expert guidance of a professional real estate agent
like Steve Hatfield!
How much are the other offers?
In a multiple offer situation buyers often ask..."how much are the other offers that have been submitted?"
Think about this for a moment. Would you want other buyers to know what your offer is? Of course not! So,
just as other buyers won't know what your offer is, you will not know what how much other buyers have offered.
As a buyer, you may be required to take on repairs required by local municipalities.
A seller can back out of the sale:
Even if a seller is approved for their short sale by their mortgage lender(s) (several months after you put your offer in),
they may be required to pay some or all of the difference between the net sale price and mortgage balance(s) back to their lender(s).
When this occurs, some sellers will back out of the deal because they don't want to pay or don't have the means to pay the money
back to their lender(s). If this occurs you'll be back out looking for another home after many months of waiting.
The plus side for buyers:
If you luck out meaning you were able to wait it out, are last offer standing, the seller is approved for the short sale and
everything else fell into place, the plus side
is that you might have gotten a home at a pretty good price. However, if a bidding war occurred and the price
was pushed up to current market value...your final price might not have been the "bargain" you hoped for when the process started.
|It is a GREAT time to buy a home so take advantage of today's low
home prices and low interest rates.
The cost to you to receive expert buyer representation provided by Steve Hatfield is ZERO $$!
That's right...FREE Buyer Representation!!
Put Steve Hatfield's 23 years of experience to work for you... Contact Steve now!
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CENTURY 21 Curran & Christie
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Dearborn Heights, MI 48127
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Licensed Realtor® Since 1987 (#6501221773)
Steve Hatfield, Realtor® provides professional real estate / home buying services to buyers and sellers in Dearborn Michigan, Dearborn Heights Michigan, the Wayne County MI (Southeast Michigan) communities of Livonia, Canton, Redford, Westland, Garden City, Plymouth, Northville and the Oakland County cities of Farmington / Farmington Hills and Novi Michigan.
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