All kidding aside, this does not mean that you cannot find a really good deal. You just need to be reasonable with what you are asking for. If you have time to wait, short sales are a good option if you are trying to save money. Patience is of the essence when trying to purchase one of these homes. A short sale is listed at a price that the bank has not agreed too so if you are saying to yourself, “WOW! That home is only X amount of money?” Chances are the bank is not going to except that low of a price. Your realtor, and yes, you should be using a realtor, can figure out what the sellers paid for the home. This will give you a better idea of what kind of a loss the bank is willing to take. Keep in mind, that even thou the seller’s have signed off on your offer, it is ultimately up to the bank to approve the sale and even thou you have submitted an offer to the bank that seller is still taking offers on the home incase you back out. If the seller has multiple lenders, this transaction just got way more difficult. Let’s say, the first lender has agreed to the offer, now they have to negotiate with the second lender to see what they are willing to take. In some cases, the first is not willing to give up some of their money to give to the second and no one can come to an agreement.
Some things you should know about before committing to a short sale…
After the sellers have signed off on your offer, it gets submitted to the bank where it can sit on someone’s desk for up to six months. There is nothing you or the seller can do to push your contract through. When they get to it is when they get to it. In the meantime while you are waiting on an answer you can be missing out on the next good deal that comes along. Or the home you have “under contract” so to speak could go to auction and your contract means nothing. Once a home goes to auction it is out of the current owners hands. It either gets purchased at the auction or it goes back to the bank and you have to wait to purchase it when it gets re-listed with the bank. If you offered on a home that is at the top of your price range, you need to be prepared for the bank to come back with a counter. Since most short sales are priced artificially low, the bank most always comes back at a higher asking price. You need to decide on what to do if this happens. If the bank gives an answer on what they will accept, and you back out, the seller is able to put his house back on the market as “pre-approved short sale” and for the next 30 days, the next buyer will have a smooth closing, all because you backed out.
Even with all of these “potential” hurdles, some short sales go rather quickly and you end up with a really good deal. Like I said in the beginning, you should not be on a time line to purchase a home if you are considering buying a short sale. A suggestion to you… If you do put an offer on a short sale, keep your eyes open for new listings that come on the market. Don’t stop your home search. You may find another home that is just as good with not all the headache and waiting.