Individuals seeking to purchase a home usually spend many hours in search of the ideal property. In some locations, real estate values have declined after several years of price increases. By purchasing a property through a short sale, buyers can obtain a property at its current market value from a motivated seller who once paid a higher price.
Some potential home sellers are in a situation where the outstanding balance on their home loan is more than the current value of the property. For those who are also experiencing difficulty meeting their mortgage obligations, a short sale is an alternative to foreclosure. In order for a prospective buyer to obtain a fair price in a short sale transaction, the lender must forgive a portion of the seller's debt.
The reason for a lender to approve a short sale is that the cumulative expenses of foreclosure may be costlier than a mortgage modification. With a reduced mortgage balance reflective of current market values, the homeowner becomes able to list the property for sale at a realistic price.
Homes that have declined in value may have had enough equity in earlier years to justify a second mortgage. A short sale becomes more complex if there is more than one lender. A short sale must gain the approval of all lenders with an interest in the property. Secondary lien holders have an incentive to negotiate due to their subordinate funding position in the event of foreclosure.
A short sale may take longer than a typical real estate transaction, especially if the seller's lender has not yet agreed to modify the loan balance. Sellers that have received lender approval for a short sale are in a position to accept your offer quicker. As with most real estate transactions, the purchase offer becomes a binding contract if accepted by both parties.
The seller is likely to require a specified amount of earnest money to accompany your offer. The terms of the short sale may require you to be pre-approved for your own new mortgage. A clause in the contract may provide for a refund of the earnest money if the seller's lender is unable to approve the short sale by a specified date.
Unlike many foreclosed properties, a home purchased through a short sale is likely to remain occupied up until the sale closing. Even if the property is maintained well, you may include a clause in the purchase offer making the sale contingent on a satisfactory inspection. Contact a realty company to assist you in the search for your new home. For more information about real estate, contact a company like Plaza Realty.Share