A short sale happens when a homebuyer needs to sell their home for less than what they owe on it. This is often due to financial difficulties that cause them to need to do away with the monthly payments.
The person who wants to purchase the property will have to go through a few steps that aren’t part of the regular homebuying process. A short sale property can be a good investment as long as the buyer does due diligence on the property.
Short sales aren’t quick
A short sale isn’t a fast way to sell or purchase a home. In normal home sales, the buyer makes an offer and works with the seller. In a short sale, the same thing happens but then the lender has to approve the terms of the sale. The lender can take its time reviewing the deal so it can determine if the short sale will net more of the mortgage balance than a foreclosure.
Short sales are sold as-is
Buyers must do due diligence on a short sale. There typically aren’t any seller disclosures, and these properties are sold as-is. Even if you have an inspection, it’s simply for your own information and not to use for negotiations.
Short sales can lead to deficiency judgments
Lenders in New York can seek a deficiency judgment after a short sale. There’s a limited time for them to do this. Sellers should discuss this with the lender to determine if this is going to happen. The deficiency judgment would be the difference between the mortgage balance and the short sale price.
Regardless of which side of a short sale you’re on, you must ensure that you understand exactly how this type of transaction can impact you. Working with someone familiar with these sales can help you to learn more about what you can expect and what options you have for handling issues if they creep up.