Short Sales Can Be Tricky
Posted Tuesday, June 25, 2013
Whether you own a property in distress or you’re looking to make a good investment, buying and selling short sales can be a frustrating process. The best-case scenario is that sellers reduce their debt and buyers get a great deal, but that outcome is ultimately up to the bank.
Below are some standard short sale trials that both sellers and buyers should be aware of before getting their hopes up:
- Sellers need to prove hardship. As a seller, you should talk with your bank and then gather all of the documents they require to put together a hardship portfolio to apply for a short sale. These usually include tax returns, employment status and other personal and financial information. Be quick about it, because the bank has the final say, and you don’t want to leave them hanging.
- Everyone needs to get used to the waiting game. This is probably the most frustrating part, so don’t plan your life around a bank’s approval. They could take anywhere from a couple days to a couple years to make a decision.
- Banks are waiting on banks. Not only are you waiting on the bank that has the mortgage, but there could also be other liens taken out against the short sale. Those third parties also have to sign off on the debt.
- Buyers should get a thorough home inspection. If you’re considering buying a short sale property, make sure you hire a professional home inspector.
- The home could go into foreclosure. Sometimes short sales take so long that the owners cannot keep paying their mortgage and the home goes into foreclosure. Then the bank takes it over and starts a new waiting game.