Monday, March 19, 2012

Will a Short Sale Work for You?

In this time of falling interest rates, and home foreclosures, it should be a buyer’s market, and it is. You just have to know how the game terms. For instance, the short sale sounds like it would be a fast sale, not so. What it really means the bank is willing to take less on the loan than originally owed just to move the house. This is good for both the buyer and seller, but by this time the bank is usually the seller.

What this means is that the bank will not move as fast as an individual home owner because the bank is dealing with hundreds of short sales and foreclosures. It may take anywhere from a month to six weeks for the bank to even accept your offer. Then you can start your loan process which usually runs around six to eight weeks. Already you’re in the third month of the process. The bad news is a short loan usually takes six months to process to closing, although some will take up to a year.

So why even consider a short sale? It is a great way to pick up a better home for less money if you don’t have to move immediately. It is a good deal for investment property too.  If you can wait, then great. Here are some things to consider.

If the home has sat along time empty things happen especially if the utilities have been shut off from freezing pipes to mouse infestation. An inspector will confirm any problems for you. Another option is to buy a home warranty that will cover any of the unexpected problems for a modest fee. It isn’t a great deal if you move into your dream home only to have the plumbing malfunction the next morning.

What is the difference between a short sale and a foreclosure? A foreclosure is the final step in the process. The bank has tried to sell the home by consistently lowering the price without any luck. This process can take up to two years before it goes into foreclosure. You’d think the bank would be anxious to sell the home for as much money as it could, and it is, but sometimes banks move about the speed of a glacier.

Sometimes people reason they can wait for a house to go in foreclosure. You can, but there is no guarantee someone else won’t bid on the home, especially if it is a good deal. If you are just thinking about investment property and don’t have your heart set on a particular house, then foreclosure is a better way to go. Keep in mind with foreclosure, especially an auction you need to have ready money and a preapproved loan. No matter, which way you want to go, now is the time to buy before the economy improves too much sending the interest rate up.  Remember a short sale is not for those short on time.  

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