With the threat of foreclosure on the horizon, an embattled homeowner has the option to “short sale” the property; meaning to sell it for less than what he owes on the mortgage.
Short sales are as such: properties that are currently under a mortgage that the homeowner is no longer able to pay for. To prevent foreclosure, the homeowner can make a request to his mortgage lender to sell the property as a short sale. Should the lender agree, a successful short sale can prevent them from incurring a total loss on the property.
If you’re in the market for short sale properties, bear these things in mind:
It’s a long process. Short sales take longer than the typical real estate transaction. The seller and the buyer can only agree upon a closing date once the lender has approved the request to sell the property as a short sale, which, in itself, requires extensive documentation and review.
Hire an expert. Due to the complicated process, it’s best that the buyer hire a real estate agent with a successful track record in short sale transactions.
Never take anything at face value. Carefully consider the explanations why the property is being sold in the first place. Consider factors like location and resale or rental value. The property may in fact be a bad investment that the seller is trying to get rid of.
Inspect the house. It goes without saying that you should also check the property itself for hidden defects and deficiencies. Since the homeowner can’t pay for the mortgage, he may have been remiss on the home’s upkeep as well.
Always read the fine print. Keep an eye out for predatory conditions or clauses in the contract to save yourself the hassle and effort of resorting to needless litigation.