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Short Sales

Pre-foreclosure, shortsale, CDPE listing…these all describe the same thing. In brief, a short sale is when a homeowner owes more than they can sell their home for and they ask their mortgage lender to ‘short’ their mortgage and take less than what it is worth.

There are many nuances to short sales but let’s focus on what they mean for buyers.

Tips when making an offer on a short sale:

<Do your homework before you make an offer. A few questions that I like to ask: Was the bank involved in setting the listing price of the home? Are there any 2nd mortgages or lienholders? Is the property scheduled for foreclosure? Has the Seller already submitted their paperwork to the bank? Will the Seller be willing to do any repairs?

< Have your financing in order – if/when the bank approves the short sale they often will want you to be able to close quickly.

< Protect yourself – make sure that any time periods in your offer,  like inspections, appraisals and financing, begin upon receipt of written approval from the bank.

< Be patient – the processing of short sales is getting faster however there will most likely be a time period where you will just have to sit and wait. The time frame can vary from bank to bank and will depend on how far along the Seller is in the short sale process.

Short sales can be a great way to buy a home below market price. However, I always suggest that after you make an offer on a short sale that you continue to keep looking at other homes. There are no guarantees that the short sale will be approved or if it is that you or the Seller will agree to the terms.

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