In the case of buying a home quickly, RUN don't walk away from a short sale listing!
Just kidding, but not really...
Arizona has/had an abundance of "short sales". Folks from other cities/states and especially countries haven't gotten the true scoop about them.
A short sale gets it's name because the current homeowner/borrower is SHORT money. The home is worth less than the bank is owed, so there is a shortage of money..
When a home is listed for short sale, the goal is to list the home for market price, get an offer and sell the home for market price and forgive the "shortage" of money from the original owner.
Sounds too good to be true right? Believe it or not, it can and does happen.
That being mentioned, buying a short sale is not a good option for all buyers...
1.For a buyer that has a specific time frame that they need to own the house, this may be a bad option. In a short sale, all parties are at the mercy of "the bank". The bank works on their own schedules, no one else's. The transactions can be as fast as 4 weeks, but as long as 1.5 years. By the way, the bank can refuse to short sale the home and the whole sale can go belly up..
2. The listing price is $150,000. Buyer writes an offer for $150,100. BANK CAN STILL SAY NO. Many folks don't understand but the bank is a 3rd party that has final say so on everything.
Example: List price $150,000
Cash offer comes in for $150,100
A. Bank can accept
B. Bank can say that the seller is ineligible to short sale. (He has no hardship or makes too much money etc...
C. Bank says they can not accept $150,100, but they will take $175,000
In the case of C.
i. Buyer can agree to $175,000
ii. Buyer can counter $170,000
iii. Buyer can walk away and the home will be re listed or any back up offer will be offered the home for $175,000
The bank will spend the time from the offer until the acceptance sending out a 3rd party Realtor to do a very quick appraisal (called a BPO) on the home. That is where the bank gets their number from!
The bank will also look into the current owners financials to see if they qualify for the short sale. If the owner makes $10,000 per month income and the mortgage payment is only $500, I would guess the chance of bank acceptance will be less than good!
Check back later this week for Shortsales 102