In these interesting economic times, the housing market has been a source debate in regards to its future outlook and whether or not it will rebound from the recession. Slowly but surely, housing has made somewhat of a comeback; prices are slowing rising in some areas and demand has picked up. For some, this is a great time to buy since prices are somewhat depreciated and their is an expectation of slow growth ahead. One thing to consider, when looking for a home in the current housing market, are short sales.
Short Sale Defined
A short sale is a home that is being listed below market value. This occurs when a homeowner can no longer afford to keep the home, and the home value is less than what they paid for. The homeowner will ask the bank or lender to forgive the difference, between the sale price and what they owe (this is where they are ‘short’), in order to let them out of the loan. For added incentive, the home is usually listed at less than market value. This allows the homeowner to get out of debt and financial trouble; it allows the lender to get rid of the distressed owner; and it allows a buyer to get a deal.
The Buying Process On A Short Sale Home
Although this can sound quite appealing, the process can be quite complicated and extend for a long period of time and is unlike a regular home sale. One reason these sales take such a long time is because, the banks are currently overwhelmed with an usually high amount of short sale requests. In areas like Temecula, California, short sales account for approximately 23% of the inventory on the market. With so many short sale demands, it may actually take a bank up to four months to respond to your offer to buy a property. This is an important consideration if you need to move within a specific amount of time or your pre-qualification may expire.
Another area of contention is requesting repairs from the homeowner. In a typical sale, a buyer will inspect the home and ask for repairs to be done. However, with a short sale, the homeowner may be unable to afford repairs. Therefore, short sales should be looked upon as a home being sold ‘as is’ to prevent disagreement and prolong the buying process any further.
Although a short sale can be quite a money saving endeavor, it comes with its own set of issues and concerns. Knowing these concerns before diving into a short sale is important in order for the short sale to move along smoothly. If you are willing to be patient, and buy a home as is then a short sale is perfect for you.