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Short sales, also known as pre-foreclosures, are a type of property on the market. Unlike how they sound, a short sale can actually take several months to close, if they in fact close at all.
Numerous factors can determine the likelihood of a short sale making it to the closing table. Educating yourself on the overall process can save you time and money.
If a borrower has fallen behind on their mortgage payments, their mortgage company may be inclined to allow the borrower to sell the property as a short sale.
Falling behind on payments isn’t the only reason a lien holder may consider a short sale. Other reasons can include:
With the massive amount of inventory on the New Mexico real estate market, you’ll inevitably come across a distressed property such as a short sale.
Home buyers should spend quality time consulting with a knowledgeable real estate broker to understand the transaction process of a short sale before considering them as an option in the house hunting.
Knowing if a listed short sale is approved or unapproved will make a world of a difference. If a short sale is approved, you can close on a short sale in as little as 2-4 months.
This is because the homeowner’s mortgage company has received necessary documents from the homeowner, ordered appraisals and/or BPOs (Broker Price Opinions) and have approved a specific list price.
When a short sale listing has not been approved, the overall transaction can take 6 months to over a year to close. This is due to the fact that the bank for one, may not realize the homeowner is attempting to sell as a short sale or is barely in the initial stages of seeking permission to sell as a short sale.
A very important factor that can determine the time-frame of a short sale, is the Listing Broker's and Buyer's Broker experience with distressed properties.
It is important to understand that the list price shown on a property, more than likely is not the approved or acceptable price for the property. While the home may look appealing and a steal for the price, keep in mind, if it looks to good to be true, it probably is. Far too often, a list price is reduced without the mortgage company’s knowledge or permission in order to attract a home buyer to submit an offer. This can lead to heartbreak, not to mention months of wasted time.
Be prepared to accept the home as-is. The mortgage company in most cases, will not make any repairs to the property.
Then, since the homeowner is in a distressed situation, they may not be able to afford to make any repairs, even if the repairs are lender required.
You should be prepared to personally be required to make the repairs, especially the lender required repairs prior to closing on the home with no guarantee of reimbursement if the sale falls through.
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