A short sale is a purchase that occurs when a homeowner sells a home that they owe more than what the home will sell for. When you’re purchasing a short sale, you’ll have to wait on the approval of the lender who holds the homeowner’s mortgage. This could mean that the process takes a long time.
In some cases, the homeowner might have preapproval for the short sale. This could be beneficial if the lender has already approved a sale at a specific price point because the approval process likely won’t take as long.
Homes are sold as-is
The homeowners who are selling the property are having some sort of financial distress if they’re trying to sell the home through a short sale. Because of this, the home will be sold as-is. Getting an inspection is critical so that you can have an accurate outline of what you’re going to have to address. Unlike a traditional home sale, you probably won’t be able to get repairs or credits for repairs on the home.
Cash is king
In many cases, short sales are approved when there’s a hefty portion of the sale price covered in cash. This can be through a large down payment or due to a completely cash purchase. The desire for cash could lead lenders to favor investors over individuals who will require a mortgage.
Anyone who’s considering a short sale should remember that these are sometimes lengthy transactions. It’s imperative for you to understand how purchasing a short sale might impact you so that you can make decisions that you feel are in your best interests. Working with someone who knows about the short sale process is often beneficial so you can plan for what’s likely going to happen.