If you are considering buying a home in Orange County whether in Costa Mesa, Huntington Beach or elsewhere in Orange County, you are likely to run into a short sale.
In deciding whether or not making an offer on a short sale is a good idea for you, there are several things to consider.
First, you should understand what a short sale. A short sale occurs when the seller owes more on his home than the home is worth and is unable to come up with the difference to pay off his lender.
In this situation, if a seller needs to sell his home despite being upside, he will need to ask his bank to accept less money than it is owed when the home is sold, this is know as a “short pay,” hence the term short sale.
Unfortunately, some people misunderstand the name and believe that short sale means a quick sale. This is usually a very inaccurate assumption.
Usually, once a short sale offer has been accepted, the seller’s real estate agent will provide an entire package to the seller’s lender.
This package will typically include a copy of the following:
Once the package has been received from the seller’s agent, it begins the short sale process.
During the short sale process, the bank will have a professional give it an estimated value for the property. If the seller has a hardship and the financials prove this and the estimated value is within a certain percentage of the offer, then the bank may choose to accept the short sale offer. If this happens, then the short sale will occur, and the buyer will get his new home.
If the bank does not accept the offer, it may counter offer or simply decline the short sale.
This process can be as short as 45 days from start to finish or as long as 6 months or more depending upon the bank and the people handling the negotiations.
The best candidate to make an offer on a short sale is a person who can afford to be patient while the short sale process occurs. This buyer should not have to move out of their rental in a specific timeframe, they should not be trying to close the sale on their own property, unless their buyer is also patient.
A short sale can be a great deal for the buyer, but it is likely to test your patience before it is over. Additionally, there is no assurance that the bank will approve the offer.
The best thing you can do if you are considering buying a short sale is to make sure that you understand the pros and cons of buying a short sale and that both the buyer’s agent and the seller’s agent are knowledgeable about the process so that you have the best chance of having the short sale offer accepted by the seller’s bank.
If you have questions about whether a short sale is right for you, please call us at 714.319.9751. We have a lot of experience with short sales on both the buyers’ and the sellers’ side, and will help you negotiate through the process of buying your new home.