Short Sale… What is that?
If you’ve been on the hunt to purchase a new home lately there is a good chance you’ve heard the term “short sale”. It’s quickly become a very popular term in the real estate industry and many new home buyers could use the cliff notes version of what it’s all about. Here is a short explanation so when your friend tells you he just bought a short sale you won’t think he picked up a new pair of Bermudas.
A short sale occurs when a home owner is facing foreclosure and works with their lender(s) to allow for them to sell their home for less money than is currently owed on their mortgage. The homeowner must be suffering financial hardship and prove to the lender that foreclosure is imminent.
Why are they so cheap? Well for starters, the price listed is not necessarily representative of the acceptable sales price. REALTORS® and homeowners set the asking price low enough to garner the highest amount of interest. In fact, the lender who ultimately has to bless the sale has little to no input in the sale at this point. So the asking price is really an arbitrary figure in hopes of receiving multiple offers in the quickest amount of time.
Hurry up and wait! The clock is ticking with foreclosure proceedings set in motion and the window of opportunity closing. Unfortunately the lender typically doesn’t share that same sense of urgency and the process can seem like its dragging on forever. Banks have built their business and systems around making money not necessarily managing the loss of it. Lenders have devoted a fair amount of resources and energy to these types of sales but are still incredibly overwhelmed with the growing number of short sales that processing one can take months. From start to finish a short sale could happen in as little as 2 months and perhaps as long as 5-8 months. If you are searching for a new home and require an exact move-in date short sales should generally be avoided.
It may not be exactly the ideal home buying experience but if you are willing to have A LOT of patience, a tolerance for drawn out negotiations and a very flexible move-in date you could land yourself an unbelievable deal. If you’d like more specifics on short sales on condos in Minneapolis or St. Paul area please feel free to contact me. I'd be glad to help.
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