Navigating the Troubled Waters of Short Sales with Smooth Sailing
The real estate market is rife with opportunities for homebuyers and investors alike. Cheap homes and discounted properties abound, and virtually every home sold today is well below its peak asking price – especially since 2006.
With current market conditions, homeowners are becoming incredibly stressed by the prospect of having their homes lost to foreclosure and an ugly stain placed on their credit report for years. This dilemma has further expanded a buying opportunity for investors and homebuyers interested in getting great deals: short sales.
A short sale is a process by which a homeowner, instead of having his or her home foreclosed, sells the property for less than its worth to a buyer. This eliminates the nasty problem with the homeowners’ credit – which can last for seven years after a foreclosure – and saves the bank the cost and hassle of a foreclosure.
But, many homeowners have reported problems with the short sale process, indicating frustration at a process that in some cases lasts for months, with plenty of stress and irritation to go around. As a result, many are simply choosing to go through foreclosure to avoid the pain.
Naturally, some problems will always persist with any process, especially one involving real estate transactions. But, short sales still remain a viable and profitable alternative to foreclosure – if the parties involved are knowledgeable and diligent.
Navigating the world of short sales for a buyer is not impossible; in fact, it can make the process flow smoothly from start to finish, resulting in a nice discount on a property without having to go battle it out at auction.
For starters, it is imperative that the owner of the home and the buyer are on the same page from the onset. The buyer should discuss the ramifications of foreclosure with the owner – acting in part as a consultant, rather than a mere purchaser – and demonstrate how a short sale can help.
It also helps immensely if the buyer maintains a steady contact with the lender, working with the bank to arrange a deal while accommodating the needs of the lender and the owner. For example, some processes are held up because of a lack of communication between the bank and the owner and the purchaser. Remember: A short sale is a mutual benefit for the bank, owner, and buyer; all three must be satisfied and on the same page before it can proceed.
Merely keeping up conversation with a bank can reduce the response time from one’s initial offer from one month to a matter of days.
A buyer can spare themselves some headache by also looking for properties that do not have private mortgage insurance – often required if the owner did not put down a 20% payment at purchase. Private mortgage insurance often is on a second mortgage and can put a serious kink in the negotiations. Researching properties and finding ones without this obstacle is a way to avoid the stress that comes with a complicated and drawn-out short sale process.
Short sales are very viable alternatives to foreclosure and can provide numerous benefits for all parties involved. It is on the buyer to act more as a consultant and facilitator and less as some person with a check in hand to make the short sale process smooth sailing.