Buying a Short Sale

What is a short sale?

A short sale is when a homeowner sells their home a a price that is less than what the mortgage balance is with the approval of the seller's mortgage holder.  Lenders agree to a short sale when the seller is able to demonstrate to their lender that, not only is their home's value less than the current balance of their mortgage, a financial hardship exists which does not allow the seller to continue making payments, nor cover the shortfall that would be generated by a normal market sale.

Why buy a short sale?

A short sale presents, to an informed and qualified purchaser, an opportunity to buy a home, condo or other property at a price less than the current value of the property.  The amount of discount a purchaser of a short sale can expect to receive varies based upon the condition of the property, the lender involved as well as current market conditions.

What to look out for when buying a short sale.

A short sale, while having financial reward for the buyer if done right, is much different than a normal, typical home sale and should not be done without professional representation by a real estate agent or broker that has the experience and qualifications to protect the buyers interests in the transaction.  The risks and issues associated with buying a short sale include:

• The purchaser's offer to purchase may be accepted by the seller however, it will be subject to approval of the seller's mortgage holder which could take weeks or even months to obtain.  
• Prior to obtaining approval from the seller's lender, additional offers may be presented to the seller and, if any are higher than the existing offer, it may be presented to the seller's lender as well.  This could result in the initial purchaser having to match the higher offer to avoid losing out or the initial offer may be rejected by the lender with the later, higher offer accepted.
• Without proper protections in the purchase contract, a purchaser may either lose the protection of a building inspection contingency or have to pay for an inspection prior to even receiving the seller's lender's approval of the offer.
• Depending upon how the transaction is being handled the purchaser may be asked, or required, to pay the cost of the seller's short sale negotiation firm which could be several thousand dollars.
• Under a normal sale, the seller may be willing to complete repairs or offer a credit to address issues raised in a  building inspection however, on a short sale, neither is typically the case and the buyer is expected to accept the property in it's as is condition.

How to start your short sale purchase...

Consult with a qualified, professional real estate agent with extensive short sale experience, such as the short-sale specialist agents with MORE, REALTORS®.   At MORE, our brokers and agents have extensive appearance representing buyers in the successful purchase of a short sale and a track record of the transaction going smoothly.

We would love to have the opportunity to represent you as a buyers agent, at no cost to you, in your purchase of a short sale.  Please call us at 314.332.1010, use our live chat in the bottom right corner to chat with us or click the button below to contact us.