This Article Is About Buying Short Sale Home And What To Expect By Home Buyers
Many first time home buyers believe that just because a home is listed as a short sale that they are getting a bargain.
- There are many short sale homes that can be bought at bargain prices
- However, that is not always the case
- A short sale is a form of pre-foreclosure where home buyers can still deal with the seller of the home
- Buying short sale home is purchasing the home for lower than the amount of the mortgage of the home seller so lender approval is required
- For example, If a home seller has an outstanding balance of $300,000 on a mortgage and a buyer is buying the house for $250,000, that is a prime example of buying a home via short sale
- The seller of the house has been given permission by the current lender and will need the lender’s approval with purchase offer for the short sale purchase offer to be valid
Benefits Of Buying Short Sale Home
Millions of home values have plummeted after the 2008 real estate and credit market crash.
- Homes that were once selling like hot cakes for $500,000 can be only worth $250,000
- If someone purchased a home in 2008 for $500,000 and has taken a $400,000 mortgage loan on it, the seller might be listing the house for $350,000 via short sale
- A home buyer might think that the $350,000 price tag is a bargain and might be putting an offer for the listing price of $350,000
- Even though the $350,000 listing price is way below the original purchase price amount of $500,000, the house can still be overvalued and the market value of the house can be worth only $250,000
Short Sale Home Is Always Not Bargain
Short sale homes is a good strategy but the home buyer needs to do their own due diligence. However, buyers buying short sale homes needs to realize that short sales are not always deals. Many times there are better deals with non-short sale listings.
- Please do not be misled with the term short sale.
- Remember that home prices have tanked drastically since 2008 and many homes values have since increased in value.
- After the 2008 Real Estate meltdown, many homes have dropped by 50% or more.
- Consult with a realtor and seek out realtor’s opinions when buying a short sale home.
- Do not just limit in just shopping short sale homes
May 23, 2019 - 2 min read