What is a short sale?
A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed.
Right now in Tampa one half of all homes on the market are a distressed sale. In my experience as a Realtor, I believe that there are more short sale listings than foreclosed properties/bank owned. This makes actually buying a home a tedious process for many home buyers.
Things to consider when purchasing a short sale:
Take into consideration that the 8,000 tax credit expires at the end of the year. That being said, a contract would need to be written by October, just to give the buyer’s lender enough time to close.
If it takes up to 60-90 days to hear from the bank whether or not they have accepted your offer, technically an offer would need to be presented to the bank by August. If you think you have time to wait before you start looking you may want to reconsider!
I’ve been working with a client of mine writing offers on short sale condos. She had some questions which I thought would be helpful for the buyers out there who are considering purchasing a short sale.
How do you feel about writing a contract on the short sales?
It’s more about how you feel and the waiting game. If it’s not bank approved, it could take up to 60-90 days to hear back from the bank to respond to your offer. It will not be a contract until the bank signs it, even though the seller will sign it. It is subject to 3rd party approval.
If an offer has been submitted on a short sale, does it mean the property is off the market? No, not necessarily. It depends on the seller, seller’s agent and what type of contingency you put in your offer. For instance, if you want to continue to look at other properties while you are waiting to hear back from the bank, the seller/agent will want to keep the property on the market. In that case, they will be able to receive other offers to submit to the bank. This may cause a bidding war!
If the 1st contract is denied, would the 2nd offer automatically be presented at that time or would it have been rejected at first offering? If two offers were presented to the bank at the same time, usually they will look at both and pick one.
How do you feel about writing an offer on more than one short sale?
That’s difficult because you have to put a stipulation that you can withdraw your offer at any time prior to bank approval. The agent may not make it pending in MLS and they will continue to market the property and look for other offers. Some sellers/agents won’t take that contingency on an offer, some will. No guarantees with anything.