Short Sale Information For Home Buyers
A real estate short sale is when the property owner owes more than the property's current market value but the owner has a hardship and needs to sell. In a typical (non hardship) situation, the mortgage lender(s) will require the homeowner to deposit the difference in the amount owed to the escrow company to facilitate the closing.
A real estate short sale is where the seller’s real estate agent and/or attorney negotiates with the lender(s) to accept a pay-off that is less than the mortgage balance and the homeowner does not to pay the difference (nor bring any funds into escrow).
We have prepared a list of all Orange County Short Sale properties currently in the Realtor MLS. CLICK HERE for a list of Short Sale Listings. The listings are updated hourly.
What is the benefit of Buying a Real Estate Short Sale?
Buying a property which is listed as a “short sale” can be a very lengthy process with no guarantee of success. As we see it, the main benefit of buying a short sale property is simply the ability “to buy a particular house” that one is very interested in purchasing (despite the time and extra energy required to complete the sale). There are certainly special houses which are worth the extra effort, and these are the properties which many of our short sale buyer clients choose to purchase. A “low price” is another potential benefit of buying a short sale property; however, often the low offers are not approved by the seller’s lender.
Will the price be lower on a short sale property?
We see some short sale properties sell at prices which are lower than conventional sales, and we see others which appear to sell for full market value. The sale price of all Short Sale properties must be approved by the property owner’s lender. The lender will hire one (or more) appraisers to ascertain the market value of the property. If they feel the buyer’s offer is adequate, they will approve the sale… if not they may counter the offer and request a higher price and a reduction in the seller’s closing costs. Occasionally, we see short sale properties selling at attractive prices close to the value of Bank Owned homes.
What type of buyers should NOT purchase a short sale property?
Short sales take time, and there is simply no guarantee that the offer will be approved. The bank may ignore the offer for months and simply foreclose on the property. It is completely the prerogative of the property lender… sometimes they approve the short sale and sometimes they do not. Short Sales are typically sold in their present “as-is” condition. The seller may stop maintaining the landscaping, pool/spa, and other systems in the house. There may be additional disclosed or undisclosed deferred maintenance. Also, short sale lenders will not consider offers which are contingent upon the sale of another home.
- So, anyone who is seriously interested in purchasing a property by a “certain date” should not get involved in a short sale.
- Anyone who is not willing to do “fix-up” work should not purchase a short sale.
- Anyone who must sell another home before buying is not attempt to purchase a short sale.
How can I find out about available short sale properties?
We have prepared a list of all Orange County Short Sale properties currently in the Realtor MLS. CLICK HERE for a list of Short Sale Listings. The listings are updated hourly.
If I find a short sale property I want to buy, what next?
If you find a short sale property you want to buy, the next step is to Contact Us. We will verify that it is still available and prepare the offer forms in such as way as to maximize the probability your offer will be approved by the seller (and the seller’s lender). Our commission is paid by the seller. It does not cost you anything to make an offer on a short sale property (other than some time).
What else should I know about short sale properties?
Since there is no guarantee your offer will be approved on a short sale property, do NOT fall in love with the home. Keep shopping and watching for other properties which meet your needs… there may be something better and you might miss it if you are 100% focused on one particular short sale property.
If you get involved in a short sale purchase, eventually you will be quite certain the agent representing you “could be doing more” to get the sale through. Unfortunately, the buyer’s agent is not allowed to speak with the seller’s lender. Except for routinely requesting updates, there is very little the buyer’s agent can do to push along a short sale approval and closing. Understand this going in so you do not misdirect your frustrations toward your agent who is in all likelihood at least as frustrated as you are.
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