A “short sale” may sound like a quick and painless process, but in reality, it can be a lengthy and costly way to buy a house. The term short sale can be misleading, as it sounds like the sale will be completed in a short amount of time. However, “short sale” alludes to the fact that the home is valued at less than the mortgage. This means that when the owner sells the home, they will still come up short on repaying their mortgage. If you’re thinking about buying a short sale home, make sure you know the risks and benefits.
The Lender is in Control
Because a short sale is a lender-approved transaction, the seller’s lender dictates how long the process will take. If it’s a large bank with a docket full of short sales and your potential home is at the bottom of the pile, you could be waiting months. This is especially important to consider if you are trying to line up this purchase with the sale of your current home. Additionally, in many cases, lenders may try to modify the terms of your purchase midway through.
Buying a Short Sale Home Often Means Buying As-Is
Getting an inspection before you buy a house is always a smart idea, but if you’re buying a house as-is, it’s even more critical. Because the seller will not be taking any money off the sale price for any defects found during inspection, you’ll need to make sure you fully understand how much each repair will cost. This is especially true if you’re planning on a fix and flip, as every unknown repair will eat into your profits.
Benefits of Buying a Short Sale Home
While there are real logistical considerations when buying short sale homes, there is an upside. Because the bank is only concerned with getting market value for the house, you know you’re not overpaying. This also means that if the home appraises for less than the sale price, the bank is more likely to lower the price to match.
Brass Financial Group Can Help
Buying a short sale home can complicate financing with traditional lenders. At Brass Financial Group, we make it easy. Fill out a pre-approval form to see how we can help. Or if you’d like to learn more about different financing options for buying a short sale home or any other real estate investments, contact us or give us a call at 609-800-FUND and one of our loan officers can answer any questions you may have.