Is Buying A Short Sale Home A Good Idea?
Home buyers will run into situations when during their home shopping process where they will run into a home that is a short sale home where the homeowner is technically the owner of record but the homeowner got approval by their mortgage lender to sell their home below a price where it is lower than the mortgage loan balance. Buying a short sale home is not always a good idea because most short sale homes take substantially longer to close than traditional closings because the homeowner needs to seek the permission of the homeowner’s lender throughout the real estate closing process.
Buying A Short Sale Home Process And How It Works
A short sale is when a homeowner has a property that is worth less than the amount of their mortgage loan balance and needs their mortgage lender’s approval to sell it at market value. For example, if a homeowner owns a home that is worth $300,000 but they have a mortgage loan balance of $400,000, they would need to come up with $100,000 out of pocket in order for them to be able to sell their home. However, with a short sale, the homeowner gets their mortgage lender’s blessing to be able to sell their home for 300,000 and their mortgage lender will forgive the $100,000 debt and the mortgage lender will write off the $100,000 deficit and not sue or go after the homeowner for that shortage.
Who Hires The Listing Realtor On A Short Sale Listing
When a homeowner gets approval from their current mortgage lender and gets approval for a short sale, the homeowner gets to choose the listing real estate agent. The mortgage lender needs to approve the listing price of the home. Whenever there is an offer on the home, the homeowner needs to submit that offer to the mortgage lender for them to approve and the mortgage lender is the seller that signs off on the real estate purchase offer. Whenever a prospective home buyer submits a real estate purchase offer, it will take some time for them to get a counter offer from the mortgage lender. Buying a short sale home can take quite some time because most mortgage lenders take their sweet time in getting back to the home buyer’s offer. The biggest disadvantage with buying a short sale home is the slowness of the mortgage lender responding back. It may take as soon as four months to close on a short sale property and other times it can take longer than six months. Buying a short sale home takes patience and time. Also, since the seller is actually the bank or mortgage company that holds the note on the property, many times the mortgage lender is not wiling to negotiate too much and many times sellers concessions is not given to home buyers buying a short sale home. Many mortgage lenders also do not give extensions for closing delays.