Tuesday, March 31, 2009

Short Sales: What You Need To Know

There's been a lot in the news lately about short sales: when a homeowner's lender agrees to accept less than is owed on the mortgage for the property. They occur all over the country -- even in Manhattan -- and can be a way to get a deal on a place, albeit with a few caveats.

Be Patient With The Process:
Short sales should be called long sales. In some cases, it could take months for a buyer to hear back from a lender, especially if the owner has two mortages or liens against the property. Perhaps just as frustrating as the wait time is the fact that you likely won't be privy to details as the deal is progressing. That could mean going months without an update.

There Are Deals to be Found in Short Sales -- But Don't Expect Outright Steals. A buyer needs to make a fair offer, based on comparable homes that have been sold recently. The offer should be aggressive, but not ridiculous.

Sales Are 'As Is' In a short sale, it isn't likely that you will get allowances from the seller for repairs that are needed, as you might in a traditional sale. Do a home inspection and know what you're getting into.

Have A Back Up Plan: When an offer is accepted and earnest money is put down, remember that you risk losing those funds if you decide to walk away and buy another home.

It's Not Only About Price:
A short sale is only a bargain if it's a home that you truly want to live in -- not something you're drawn to only because of its low price tag.