The lender could contradict, reject, or not respond. Even if a seller has already been approved by their lender for a short sale, there is no guarantee that the lender will accept your offer. They may think that your offer is too low. The term “short sale” is a bit misleading.
The bank or lender that holds the mortgage must approve the offer, rather than just the seller. The property may end up in custody for months and months. Meanwhile, a better property could come on the market and the hopeful buyer is stuck in the red tape of short selling. For that reason, it pays to have an experienced real estate agent on board.
Lenders will be hit hard by a short sale. No matter what happens, they are losing money. It's just a matter of determining how much money they can recover in a short sale instead of going through the entire foreclosure process. In addition, you can have them inspect a short sale, unlike what you would do when buying a foreclosed property at auction.
The word short sale doesn't mean it's a good deal; first you have to check the values in the area and make sure it's as good as you thought. While short sales may not be fully up to date or ready for sale, they are likely to be in better shape than other struggling sales. Check your state's laws that cover the foreclosure reporting process to find out exactly where to look for unlisted properties that may be subject to short sale. In a short sale, the owner has full control during the sale process and can stay in their home during this period of time.
You have no guarantee that the lender will go ahead with the short sale, and when you find out, you've already wasted a few months and possibly lost several opportunities to buy other homes. Get a lawyer with skills and experience in short selling to help you with the offer, buying and selling, and closing. Short selling doesn't have to do with the time it takes to complete the sale, but rather refers to a lower purchase price than the homeowner owes their mortgage lender. Make sure you have the representation you need and that the short sale is processed correctly so that it doesn't lead to foreclosure or the bank goes back years, so look for the deficit money on your side.
Short sale properties are found in the MLS and online real estate markets and can simply be designated before foreclosure in the listings. If short sale homes can only be purchased at prices commensurate with the current market value, then it would be better to focus on traditional advertisements. A short sale occurs when a property is sold for less than what is owed on the mortgage with the lender's approval. According to a major mortgage company, Freddie Mac, in its FAQ section on buying a property for short sale, home mortgage insurance (a policy that protects the lender from default by a homeowner) could also affect the lender's acceptance of the sale.
It also opens the door to buyers looking for a good deal on a home, so in a way, a short sale can be beneficial to all parties involved. A short sale occurs when a homeowner owes more than the home is worth on the outstanding mortgage. The lender has the authority to approve or deny the property owner's short sale request as deemed appropriate.