Short sales happen when the seller doesn’t receive enough money to pay off their mortgage, and as a result, is willing to accept a smaller price for their property. For a buyer, a short sale must seem like a great deal since the final price has been reduced. However, one must understand fully what a short sale actually means to avoid any pitfalls.
A short sale transaction is a long process, which we present in a concise process chart below:
In this article we will talk about 5 important things a real estate investor should be wary of during this process and share how you can find numerous short sale listings for your future investments.
Short sales doesn’t mean discount
When a real estate property is approved for a smaller price than it was purchased some time ago, it means that probably the seller paid too much, in a rising market and the property exceeded its mortgage value.
So, when you see a decreased price that doesn’t mean that the property has a discount. Most likely, the seller has no equity left, or even negative equity because the market has fallen and they have over-mortgaged their property.
When you are short selling your house there are stricter qualifications to be met. Some real estate agents push their clients to short sell even if they don’t qualify for one. Thus, this is something you should pay attention to when considering proceeding with a short sale transaction.
Sell “As Is”
During a short sale transaction the lender sells the property in its present state without making any improvements on its condition. So buyers should take into consideration that the property might need some major renovations.
Takes longer to close
It takes from two weeks to two months for a lender to respond on a short sale purchase offer. And that is because more paperwork needs to be processed, while sometimes more than one lenders are involved and, thus, have to approve the transaction.
Lender can change conditions
Sometimes the lenders wait until the last minute to negotiate the terms of the short sale transaction. And that happens because they want to be certain that they won’t suffer any major losses due to market or legal changes.
Most of the time, a house inspection can help you avoid some of the previous-mentioned pitfalls. But what about the properties that do not pass the standard inspection? Then you need a trustworthy provider to ensure that you are provided with the most accurate and relevant real estate deals for you. And the RealEstateCake app is exactly that.
RealEstateCake app makes investing in real estate a piece of cake. Sellers can list their properties on the app for free and real estate agents and investors can have exclusive access to them with less than $1 per day. Visit their website or download the RealEstateCake app from Google Play Store or App Store and enjoy the best real estate experience.