A Buyers expectations of a Short Sale purchase

Purchasing a home that is being sold by the seller as a short sale can provide a buyer with a wonderful opportunity but keep in mind these things:

The short sale properties quite often are priced below market value. Wow, so imagine investing in a property that has the possibility of instant equity. A number one reason and benefit of purchasing a short sale home.

The seller is a distressed homeowner and will not have any money to contribute to closing, repairs, etc. And the lender does not allow the seller to have any money to contribute. With this in mind, buyers cannot expect the seller to contribute any money in any way.The buyer will contribute all money to transaction.

Buyer will be purchasing the property “As is”. This means any and all repairs that the buyer sees are needed will be their responsibility.

Buyers must present their offer to buy being already approved by a lender. Not pre-qualified but pre-approved; meaning a lender has committed to funding their home purchase. If they’re serious about purchasing a short sale home make sure they’ve done all their homework ahead of time.

When their offer has been submitted to the seller’s lender in the sales contract, this approval process can take on an average between 30-45 days; often longer. It’s critical that the buyer understands this time process for much needed patience. Sell Your House Fast Orland Park

Once their offer has been submitted to the seller’s lender and they accept their offer, the buyer will typically have about 30 days in which to complete their funding for closing. Another reason why #4 above is so critical.

Having been informed of such expectations during a short sale, buyers and buyers agents will sign a disclosure document acknowledging that all is understood. We do not want any surprises to any party.

Done properly, short sales can benefit all parties involved – it can be a great thing!

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Short Sales for Sellers (Chapter1) Do you qualify for a Short Sale?

First let’s look at “What is a Short Sale?” You may have heard this before but lets not assume that everybody looking in here knows the answer. We’ll get into more detail shortly.

A Short Sale is when you receive approval from your Lender (Bank) that they will agree to allow a Buyer to purchase your home for less than what is owed on your home(mortgage balance).

For example, You owe $300,000 on your home and you have a buyer who has offered to pay $225,000. Your Lender will agree to accept the $225,000.

This approval is based on a number of factors that will be addressed in another Chapter.

You’ve received approval now from your Lender and the next thing for you to do is to pack up all your belongings and get ready to move upon the closing as a new Chapter of recovery will begin to take shape in your life

Now the question comes up; “How does somebody qualify to sell their home as a Short Sale?”

It will need to be determined that a Hardship occurs in your life. So what qualifies as a Hardship? Lets discuss some possible hardships:

You’ve lost your job and your household income has been drastically reduced.

Your family has had medical expenses that have eaten into your ability to pay.

You’ve gotten a divorce

Your adjustabe rate mortgage has adjusted and there’s no way you can make the new payment on your income.

Your employer has cut back on your salary or perhaps on your hours of work.

A loved one has died

Your job required you to move out of town and you’re now paying two house payments and you can’t sell your home that you’ve been trying to sell.

Basically, you are now living a financial nightmare where your expenses are more than your income; you’re insolvent

Other economic hardships may occur and may qualify you for a short sale when you’re not insolvent. At this point, your Lender may accept a Promissory Note for your short deficiency(to be discussed in a later chapter)

You will need to be able to document your hardship as your lender will want proof.

You will need to prepare a Letter of Hardship detailing your circumstances and what got you into your situation. This is a letter that you need to write and you don’t want to leave anything out. Your Lender must be able to feel your distress.

The more you know, the better prepared, the better the outcome. Stay tuned for the next Chapter addressing Short Sales. Come back soon to see the next released Chapter. Got something that you’d like addressed, let me know.

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