How to Approach a Short Sale
With Portland’s hot housing market in full swing, the homes listed as short sales can appear mighty enticing with their low listing prices and light competition. Before you tell your realtor to type up that offer, though, make sure you know just what a short sale can entail.
Start with the definition
A short sale is the final step before a foreclosure. This step happens when a house is sold for less than what the owner owes, meaning the lender(s) have agreed to the sale and acknowledge they won’t be getting all their money back. Because of this, when an offer is made not only does the seller have to accept, but each of the banks/lenders involved have to accept the offer as well. Short sales are often the result of owners defaulting on their mortgage payments, but can also occur if the value of the property has fallen so the owners owes more than the property is worth.
Be prepared for the long-haul
Despite their name, short sales are anything but quick. On average, short sales take between 3-6 months to close- a far cry away from the average 30-day closing with a conventional sale.
Accept that there will probably be property damage
When a home is facing foreclosure, it’s common to see the homeowners neglect or even vandalize the property. It’s likely that all of the owner’s money has gone toward mortgage payments and have let many things fall to disrepair. In some instances the homeowners are upset over losing their home and purposely destroy parts of the property. Homes that have been abandoned can suffer from neglect, leading to problems like mold, pest infestation, or squatters.
Be realistic about the cost of repairs
When getting the home inspection done, ask questions. This is your time to really investigate and see what you are up against. Get a feel for what it is realistically going to take to get the property back up to your standards and start researching what those costs will be. Consider bringing in experts for issues such as mold removal. Even the most seasoned home buyers can underestimate renovation costs, so be as prepared as you can be.
Table that excitement
With so many players on the board, it’s fairly common for these deals for fall apart. One of the banks might reject your offer or simply not get back to you. Short sales can be a rollercoaster, so save yourself the disappointment by putting all your eggs in one basket. Put in your offer, but keep looking at other options. If the short sale works out, great! But if it doesn’t, you won’t be angry at yourself for losing all that time waiting to hear.
Find yourself the right agent
Having the right agents is your best defense against getting frustrated throughout this process. Short sales can get complicated fast, so if you are open to a short sale make sure your real estate agent is confident in handling one. Particularly if you have not gone through a short sale yourself, find someone who has experience with these sales and can handle problems swiftly as they arrive. You are going to need someone whose advice you can trust while navigating the short sale waters.