What Are Short Sales?
A short sale refers to a home that is for sale for less than what is owed on the mortgage.
The home is still owned by the home owner, as opposed to a foreclosure which is owned by a lender.
However, to complete a short sale the seller will need to get the mortgage holder’s approval because the sale of the home will result in a loss for the lender.
Is a Short Sale a Good Deal?
You maybe wondering if a short sale can be a good deal for a first time home owner?
Yes.
Foreclosures and short sales are where you will find the best prices on homes. Short sales usually will be in better shape than foreclosures and be priced comparably, so usually they represent the best bargains.
The trick is getting the lender to approve the short sale.
How to Find a Short Sale
ZipRealty has a free web site that allows you to search homes for sale by city or zip code.
If you see a house that interests you, simply send a request for more information and an agent will respond via email. It’s so simple you won’t believe it!
How Does a Short Sale Get Approval?
There are many criteria a lender uses in deciding if they will approve the sale, and the criteria change from lender to lender, and frequently change within the same lender depending on the individual processing the request for approval.
The approval may be based upon the home owner’s ability to continue to pay the mortgage, how much the lender is being asked to take a loss for, and who actually holds the note on the home. Many lenders simply act as a mortgage servicer and the mortgage is owned by another investment entity other than the lender.
While there seems to be some common criteria for approval that may allow the seller’s agent to make an educate guess as to the chances of a successful short sale, until you make an offer there is no guaranteed way for anybody to know for sure that the sale will happen.
How Long Does Approval Take?
A lender typically does not approve a short sale before a buyer has made an offer to buy the home. Once an offer has been made, the lender may begin evaluating the possibility of a short sale.
Keep in mind the lender is not obligated to approve a short sale. Therefore there is no set time frame the lender must give you an answer in, and they may simply not answer the request for short sale approval.
At best expect it to take more than 30 days to hear anything.
Good luck on your hunt for your first home!