Why would someone be interested in buying Henderson short sale real estate if the process takes twice as long as a normal sale? Many home buyers who are looking for a deal ask their real estate agents to show them short sale properties. This hope for finding a great deal isn’t always valid as lenders will want top dollar for the home as they are already taking a loss on the sale of the home. However, if you are dealing with a realistic lender you may be able to find a great deal. Usually homeowners who are short selling their home did nothing to prepare the home for a sale and buyers with experienced short sale agents will be able to negotiate the price down because of all the updates and possible repairs needed.
Another thing to consider is how long you have till you have to be moved in? If you have a 2 month window to look for and purchase a property, then you should stay away from short sales and foreclosures. It will often take a bank a month or two, possibly more to review and approve an offer on a home. During that period you may not hear back from the listing agent at all and feel like you’re not sure what you’re waiting on. Remember that banks or lenders are taking a loss in a short sale, and they are in no hurry to complete the sale.
Another downside to short sales is that usually you will need more cash upfront for closing costs as it is not unusual for the seller to be behind on their utility or HOA payments which will need to be paid at the closing table. If you are only planning on putting down 3-5%, you also may want to stay away from a short sale because of the other expenses above and the repairs that may be required immediately.
However, if you are planning on taking several months to purchase a home and move in or fix up to sell or rent out, and you will be paying cash for your property or have a decent down payment, a short sale may be perfect for you. Though banks can make it hard to get an amazing deal, the key to buying short sale properties is to have an experienced short sale real estate agent to help you through the process. Knowing the current market values of homes in the area is also a huge factor to finding a deal on a short sale, this is another area in which your short sale real estate agent can help. The fact that a short sale may need more work than traditional sales in the area will give you and your short sale expert an edge against the bank to talk them down. This is true of course, if the lender you are dealing with is fair, which is not always the case.
This means that they will not offer repairs or may be unwilling to reduce the price for necessary repairs. THIS DOES NOT MEAN THAT YOU SHOULD NOT HAVE A HOME INSPECTION! An experienced short sale real estate agent will encourage you to still pay about $500 for a home inspection. This will help you determine if the home is in good condition. If the home inspector finds major issues, you will at least be able to make an informed decision on whether or not you should continue with the sale. The inspector may know the costs of certain repairs as well or be able to refer you to someone who can give you a better estimate.
Borrowers facing foreclosure may ask the lender to accept a discounted payoff on their loan, a “short sale” or “short payoff”. This allows borrowers to avoid foreclosure actions, and often offer lenders an expedited and less costly resolution of the situation.
Most lenders have specific criteria that relate to borrowers’ ability to repay the debt, in order to consider short sales. Some lenders will consider a short payoff only if the borrower can produce evidence of hardship. The lender determines if the seller is eligible to sell the home at less than the outstanding debt due to hardship. Owing more than the home or property is worth is not necessarily a hardship. Hardships include divorces, unexpected hospitalizations and medical expenses, job losses, deaths of family members or similar catastrophic situations. Additionally, a budget must show that the seller’s expenses exceed their income/assets, they are behind on their payments, and there is no way to repay the lender.
A property that is distressed or requires extensive repairs may also qualify. If the lender were to foreclose on this type of property, it would have to pay for all the repairs necessary to sell the property. A short sale may represent a more cost-effective way to pay off the loan. Steps of the Short Sale from the buyers perspective.
Depending on the institution, there may be multiple stages and negotiators handling the file. If there are no hangups there could be decisions of acceptance, counter offers, or rejections, hopefully within 60 to 120 days.
Short sales are time consuming and difficult. See Why Short Sales Can Fail page. Finding the right buyer for a short sale is a difficult task by itself. The buyer must be in the position to wait, and have the patience to wait month on end without any substantial updates. Then the sale could be denied by the lender, and in the mean time the buyer may have missed other purchasing opportunities. Buyers will also need to have their financing in place and be able to close the sale, usually within 30 days of receiving the short sale approval. Short sale approvals are usually valid for 30 days, extensions could result in additional fees and expenses which could cancel out the short sale. Buyers and sellers may need to be prepared for additional out of pocket expenses to settle at close.
Homeowners who are current with their mortgage payments may be able to take advantage of today’s mortgage rates and retain ownership of their home via refinancing to a 30 or even 15 year fixed rate loan through the Home Affordable Refinancing Act.
Some basic requirements: Owner occupied, 1-4 unit home, Owned or backed by Freddie Mac or Fannie Mae, Loan to value (LTV) ratios above 80% but not more than 125%, Must be current on existing mortgages, must have enough income to support the new mortgage payments.