Trying to find the house of your dreams is often challenging, especially when the market in your area is a seller’s market. As you’re checking out listings, you may notice that some are being sold as short sale properties. This doesn’t mean that you’re going to get the home quickly.
A short sale means that the current homeowner can’t afford to remain in the home so they’re trying to sell the home. The catch is that they’re having to sell it for less than what they owe on the mortgage. In order to do this, they have to get the lender’s permission. This can take a considerable amount of time, especially if the lender is a larger company.
Why would a lender approve a short sale?
Lenders will sometimes approve short sales because they don’t want to go through the foreclosure process. They get to keep the entire profit from the sale of the home to cover part of the mortgage. They have the option of going after the homeowner who sells the property for the balance through the use of a deficiency judgment; however, some lenders will forgive the remaining balance.
While it’s possible that a short sale can result in a good deal for the buyer, there’s sometimes very little room for negotiation. This could mean that you end up paying right at the asking price for the home.
Anyone who’s considering buying a short sale should understand what they’re facing. It’s imperative that you protect yourself from a legal standpoint. It’s best to have someone familiar with real estate law review the documents so they can determine if there’s anything amiss.