I have never purchased a home on Short Sale thus I am unfamilar with the term, does it mean they will entertain offers? Does a Short Sale mean it might be foreclosed on?
Mr. Needer Know
When purchasing a Short Sale the negotiations are between the Buyer and the Seller. Once price and terms are agreed a contract is signed by both parties and the property goes into pending status. A part of the purchase agreement is an addendum stating that the purchase is contingent (subject to) the Seller’s Lender agreeing to accept less money (short) than what is owed them.
Getting the Lender to agree to accept less is a process that can take 2 weeks or 2 months. Basically we have to submit the contract for the property and the Seller’s financial information to the Lender and make a case of why it is better for them to accept the Short Sale than it is to foreclose on the property.
From the Buyer’s perspective the biggest drawback is the uncertainty. You cannot be sure the property is yours until the Seller’s Lender makes a decision. Their decision can be:
- We want more money
However, because of this uncertainty the property is normally priced to reflect a “negative property condition”. This negative condition is the time required and the uncertainty involved. It puts a limit on the amount of Buyers that are interested and who are willing to have patience while the Seller goes through the process. This makes it a good buying opportunity for a patient Buyer.
Does this help?
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