Short-Sale: What is it?

by kenlavertu on May 9, 2012

in Featured, Latest News

It’s a buyer’s market for sure, but many buyers don’t exactly understand the nuances between traditional sellers, foreclosures, and short sales.

Traditional sellers and foreclosures are easier to complete. Both usually close within six weeks of agreeing on a price and foreclosures especially can be great investment opportunities. The main difference between foreclosures and traditional sellers is the condition of the home. Banks sell foreclosures “as is,” which means that steal of a deal could turn out to be quite the money pit. If you’d like to purchase a foreclosure, I strongly recommend using an experienced realtor who has a long list of trusted, thorough home inspectors. You need to know what you’re purchasing.

Short-sales are the most challenging of the three. In a short-sale, the seller has not yet relinquished property rights to the lender, but has agreed with the lender to sell the property at a loss to the lender. When buyers make an offer on a short-sale, both the seller and the lender have to agree on the price, which can take several months. And the larger the lending bank, the longer the wait.

Short-sales get even more complex when two or more lenders have money invested in the property. Because secondary lenders are not entitled to any financial restitution once the property goes into foreclosure, primary lenders all too often are content to reject short-sale offers and wait for the impending foreclosure. The net result for many buyers is a long, frustrating process where banks drag their feet before finally rejecting the offer.  Yes, short sales can be great bargains, but they add delay to risk – most short-sales are sold as-is.

If you can be patient, go for it. I find that most investment buyers are willing to wait it out, but most family buyers are not prepared for either the wait or the risk. I’d love to step you through the process. Call me for an appointment.

Leave A Reply With Facebook

Northern Colorado Home Search Northern Colorado Home Values

Post by Ken Lavertu

Ken has written 31 articles.

Previous post:

Next post: