Benefits Of Buying Short Sales

With the steep fall in home values, there are some great deals to be had in Arizona’s real estate market. You may have thought of taking advantage of low home prices by buying a short sale with the help of an experienced realtor. Let’s see what a short sale is, its benefits, and how to avoid the pitfalls of short sale offers.

What are the benefits of short sales?

A short sale by definition is a home that is sold for less than what the seller owes on the property. The seller also does not have available funds to make up the difference. For sellers, a short sale can provide a way to avoid foreclosure with its accompanying penalties. For lenders, a short sale means getting most of the property’s value without the legal and financial costs of foreclosure. Finally, for buyers, a short sale is a great opportunity provided they have cash or have pre-qualified for a mortgage and can wait the 2-6 months required in the short sale process.

Avoiding short sale problems

  • Rejection from lenders – If your offer is much lower than the fair market value of the home, it’s possible the lender could reject it, which means you have wasted a lot of time. The lender could make a counteroffer also, which could add weeks or months to the process. Use your real estate agent to come up with an equitable first offer to avoid rejection.
  • Unacceptable terms of the contract – Assuming the lender accepts the short sale, the seller could be asked to repay the deficit on the original loan. At that point, the seller may pull out of the short sale. Lenders can also change the terms of the contract to something less acceptable to the buyer. Your agent can help you avoid lenders who commonly have these issues.
  • No repair credits – Most short sale homes are sold “as-is”. Lenders often do not give repair credits because they are already taking a loss on the home. Be ready to pay repair bills up front, or shop around for a short sale that is in good condition.

Buying a short sale can take a lot of time and patience. That’s why it’s always best to get the help of a real estate agent who has experience in short sales. If you can persevere, a short sale can be a great value for you and your family.