Seems these types of home sales have been in the lime light for some time now. But when taking out buyers I am finding that though we are always hearing about them, few understand the difference. Here are some good things to know when looking to BUY.
A foreclosure is typically owned by a bank who is represented by a listing agent. A buyer’s agent preps an offer like most traditional sales, except that most of these are sold As-Is. As-Is means that the seller will make no repairs. Within the offer, the buyer is able to elect to do home inspections with the right to terminate. This protects you in the event an inspector finds major problems that may change the way you feel about the house. These transactions can go very smoothly and settle in the average 45 days. The “short” in short sale has nothing to do with TIME. It refers to the owners paying the lien holders SHORT of what they owe. Short sales are usually sold As-Is as well. Once an offer is made to the owners, the owners can choose to sign it or not. If they sign the offer, the listing agent then submits the offer to the mortgage company – the 3rd Party. Several steps within the mortgage company need to take place. This is what seems to take the longest. I usually advise my buyers that submit on a short sales, we will probably not hear from the listing agent for 3 months. This process has gotten better, but is still so unpredictable. I also have a series of questions that I ask the listing agent to be sure they understand the process, as agent can list a short sale. Some are better than others. ***Fun FACT*** Keep in mind that the listing agent sets the list price. It isn’t unusual for a mortgage company to counter with a higher amount than what the house was listed. The bottom line is this, I never hesitate to make an offer on a foreclosure. But with a short sale, I usually tell my buyers that unless you are getting a killer deal, it might be best to look at others. The most important detail to understand is that the banks that own foreclosures directly call the shots, set the list price, & negotiate. Short sales have an added party to approve the contract/price. The home owner doesn’t have much control in the deal. And in some cases there could be multiple mortgage companies attached to one property.