Could A Short Sale Be Right for You?
Short Sales are a part of our current Real Estate market in the Hudson Valley. Much discussion about short sales flood the internet. Not everyone knows exactly what a short sale actually is. A short sale occurs when the proceeds from selling the property will fall short of the balance of debt that the owner has with the bank. It has nothing to do with the time it takes to close on a property.
I often get buyers that are looking to purchase a new home thinking that they can find a fabulous deal by purchasing a short sale. Some buyers are lucky and they can find a truly amazing deal. This is not always the case. Unfortunately, a good number of buyers are not really familiar with what it means and how the short sale process works. They have heard something in the news, but no real information on what to expect, and how it can relate to them.
The simplified version goes something like this. You see the home and decide you want to purchase it. You write up an offer to purchase the home. The seller and agent review it and see if it looks reasonable and then decide if they want to submit it to the bank. If your offer is chosen to be submitted, then you go directly to contract. This is done without knowing if the bank will approve the short sale and the amount of your offer to purchase. You get a home inspection that you pay for up front out of pocket. You then sign contracts and put a down payment on the home. You still do not know if your offer is accepted.
Next is the fun part; waiting. The time frame varies based on the location of the home; the bank and how fast ALL parties get the short sale process to move forward. The sellers have many documents to produce and it all takes time. I have seen short sales take two and a half months, and I have seen them take longer than six months and still not close. During the process you have no guarantees that the bank will approve the short sale. The bank can come back and ask for an increase to the purchase price and then re-negotiate the price. They can also just not approve the short sale based on the borrower’s circumstances. If the sale does not go through, then you receive your down payment back, but you lose time and the money that you put out for the home inspection. You also will have hired an attorney and he will most likely expect to be paid for his time even if the deal falls apart.
Short sales can be great if and when they finally close. They can be a major disappointment at times and you have to start all over. On the other hand, there are some really great situations when a perfect match comes together for lucky buyers. It is a personal choice, but you need to know early on what the risks and benefits can be. Make sure you understand the process and that nobody is able to give you a time frame. Choose wisely, and if you have any other questions about short sales in the Hudson Valley, don’t hesitate to ask.
published by: your real estate expert Janis Borgueta Key Properties of the Hudson Valley as a community service in Newburgh NY. To receive more real estate information please subscribe to this blog. Looking to buy a new home? Search the MLS for Homes in the Hudson Valley. You can contact Janis at (845)-527-7115 or find her on Google+