Wednesday, October 17, 2007

Buying Short Sale Property

Many homes are listed with "short sale" in the caption. What this means, sellers owe more on the home than the asking price, so the lender can agree to sell it for less than what is owed on the mortgage.

Why would a lender to this? There is a alot of time and money that is expensed by the lender with legal fees in proceeding to a foreclosure, getting the property ready for auction or sale. Investors are less willing to purchase these foreclosures from the banks because the spread for them to make money is so small. So banks are selling more of these properties on the resale market, where they sit for months.

How is the buyer impacted? Most lenders today will not approve a short sale until they receive a contract, and all the documentation from the seller substantiating the necessity of the short sale. This means because the property is listed for a certain price by a seller, does not mean the bank will approve it. This is where you will see in listing, contract require"third party approval". In addition, lenders typically do not entertain seller concessions such as closing costs, or repairs credits.

Ultimately, this is lengthy process for the buyer to wait to determine if their offer is accepted.

Short Sales save sellers from the foreclosure process, destroying their credit. For more information on Short Sales, please click the following article http://www.orlandosentinel.com/orl-mortgage1407oct14,0,3084495.story?coll=orl_tab01_layout