Should You Purchase a Short Sale Property?

Buyers looking to score a great real estate deal often consider purchasing a short sale--a property that sells for less than the balance owed on its mortgage. There are many different types of short sale properties, from upside down homes to vacant land. While purchasing a short sale can be financially beneficial to the buyer, it can also be good for the seller and lender, as it keeps the property from facing foreclosure.

"If you think purchasing a short sale property may be right for you, seek an agent specializing in short sales, as the process is often more complex than a traditional real estate transaction," says Lawrence Finn, CEO Owner/Broker of Coach Real Estate Associates.

There are some extra steps that buyers need to take when entering into a short sale, which can require doing some additional homework and assembling the right paperwork--this is why having a short sale specialist on your team is crucial.

You need to assemble an arduous proposal that includes a specific short sale request application, an authorization letter, the purchase and sale contract, a statement of the property's value, a detailing of the costs and liabilities, and a settlement statement, which can be prepared by your agent.

According to Finn, paperwork aside, many short sales involve a series of extensions and can often take longer than other real estate sales. This may not be a big deal if you're an investment buyer, are purchasing a second home, or have a relaxed move schedule. However, if you're relocating for work or otherwise facing a time crunch, a short sale purchase may not be the smartest move.

One of the biggest headaches that comes along with short sales can come from the bank. "Keep in mind that just because a property is listed with short sale terms, and the seller accepts your offer, this doesn't necessarily mean the lender will accept," Finn warns. This can create extra stress and extend the time until closing.

Your agent, if acting as buyer representative, can help with the research by finding out who is in title of the home, whether a foreclosure notice has been filed and how much is owed to the lender. This information is vital when deciding how much to offer on the home.

Information about Real Estate Short Sales

No matter where your financial status falls in today's wide economic spectrum, an understanding of real estate short sales and how they affect the value of all homes within our community is becoming more and more important.

"Hardly a day goes by without at least one person asking me about the implications of short sales--either in terms of how it affects them as a home seller, or what it means to them as a buyer looking for a great opportunity," says Lawrence Finn, Jr., CEO Owner/Broker of Coach Realtors . "That's why our company and its sales associates believe it's critical to proactively communicate accurate information about short sales."

Here are three links to informative articles about different aspects of real estate short sales:

What can I expect during the short sale buying process?

 

Will a short sale save my credit?

 

 7 tips to buying a short sale.

 

 

The Impact of Short Sales on Your Home and Our Community

No matter where your financial status falls in today's wide economic spectrum, an understanding of real estate short sales and how they affect the value of all homes within our community is becoming more and more important.

"Hardly a day goes by without at least one person asking me about the implications of short sales--either in terms of how it affects them as a home seller, or what it means to them as a buyer looking for a great opportunity," says Lawrence Finn, Jr., CEO Owner/Broker of Coach Real Estate Associates . "That's why our company and its sales associates believe it's critical to proactively communicate accurate information about short sales."

Accounts of distressed, or so called "under water" properties, seem to be a daily occurrence. According to Mr. Finn, the term "under water" was coined to describe the condition of the outstanding balance of a mortgage exceeding the market value of the home. If a property is under water but the homeowner is current with their mortgage, the situation is of less consequence. If a homeowner stops paying their mortgage, however, lenders have little option but to act. This can result in the forced sale of the property.

When a mortgage lender enables the sale of a property for an amount less than the mortgage balance, this is a "short sale." "The problem is, the lower prices that short sales generally command on the market can negatively affect the value of other properties in our community ... including yours and mine," explains Finn.

Homeowners facing financial challenges need to have a better understanding of their many, and in some cases better, alternatives, adds Finn, including loan modification, deed-in-lieu, and foreclosure.

"Understanding short sales is particularly important for today's home buyers," explains Finn, "so that they fully understand both the opportunity and the financial return that a short sale-related property purchase can represent ... as well as the pitfalls."

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