Sunday, May 22, 2011

Buying a Short Sale

Disclaimer: I am not an expert when it comes to buying homes, I am not a real estate agent, I am not a broker, lender, or have anything else to do with the real estate business.

I am a wife and a mother who just bought her first home. I can only give you advice from my point of view and hopefully shed some light on a confusing process (at least it was for me!). I promised to write a post on the woes of home buying back when I invited you all over for a summer bbq!

What is a short sale?
A short sale is when a homeowner is upside down in their mortgage and selling to avoid foreclosure. The bank (that is the lender) has to approve the sell since they will lose money, but it is different from a foreclosure where the bank owns the house. Also, to add there are a lot of short sales in my area (Southern California) in fact this may be my skewed viewpoint but I would say like 90%! (total exaggeration).

Now that you have a little idea what a short sale is...

The waiting game.
Buying a short sale can take a very long time or no time at all. It is very common for you to put your offer in and not hear back from the bank for a few months at which point the answer could be no. If it is an approved short sale things can move faster.

Approved short sales.
In order to bring in more traffic on a house often the listing price is well below the already low market price. It is also well below what the bank will accept. One might think that this is not fair, but this is the world of short sales. Also worth mentioning is the fact that banks continue to accept offers on a home after they have the first offer and even when the home is in escrow! That is one way an approved short sale comes about (when a home falls out of escrow). An approved short sale is a price the bank has already agreed to take, thus making it a faster home buying process.

Our Story. 
We looked for a home to buy on and off for three years. We put in about 20 offers. (not kidding!) This is completely different from the way home buying used to be. Several people would tell us "you look at home, you think it over, then you put an offer in if you like it,then you get the home". Not the case with a short sale. There were often times where we put our trust in our Realtor (who was awesome by the way!!) and submitted an offer without seeing the home in person. Even though the home buying process moves very slowly a house could have 5 offers on it the first day it went on the market. Since you could withdraw your offer and there was no money involved at this very early step it made sense to do this. (little sense, I'm sure)

Eventually we found our home, the home we had been waiting for. It was everything we wanted and more. I love our new home and our neighborhood. We moved into our home 3 months after we made our offer. It was a very quick process for us. We were lucky and I know it. I am incredibly grateful.

Short sales are a touchy subject because it means they are coming at a time when many people may or may not want to sell their home. I feel for all these homeowners, parents, children, and families.

1 comment:

Casey said...

This was totally educational! Thanks for sharing! I love your new home, too!

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