The truth is, there are great deals to be had when you buy a home on a short sale. The number one key to success in purchasing a short sale home or property is patience. The average short sale transaction will take between 60 and 120 days to close.
What is a short sale?
By definition, a short sale is a home that is purchased for a price that will not produce sufficient funds to satisfy the liens that are currently on the property. These liens could include any combination of first, second and third mortgages, judgments, construction liens and even tax liens.
What is the process for a short sale?
When it is identified by the homeowner and their real estate agent that the home will be a short sale, it is necessary to make that information available to all other agents. When a prospective buyer makes an offer on the property, the contract is first signed by the seller.
Unlike a typical transaction, this is merely the first step in the short sale process. The offer is then sent to the lenders who have liens on the property and the negotiations begin. The banks will order valuations to be conducted on the property to ensure that it is not being sold significantly under it's current market value. Each case is different and takes a little different approach.
What does this mean for me?
Most situations include some form of first and second loan combination. Under these circumstances, the primary lien holder will more that likely require payment in full for the debt owed and the secondary lien holder will be the one who is faced with a loss. If the offer is not enough to satisfy the first lien in full, it will become necesary to negotiate with both the first and second lien holders.
With so many homes being purchased with 100% finacing over the last several years there are quite a few short sale opportunities out there despite declining values that will provide instant equity for Buyers.