A Buyer’s Market, Short Sales and A “Great Deal”
A buyer entering the residential real estate market looking to steal a great deal could be surprised to find that a short sale may not be their best avenue for success. In a short sale the mortgage lender is agreeing to allow the homeowner to sell the property at a price that is less than the amount the homeowner owes on the mortgage. The lender is not obligated to grant the homeowner the benefits of a short sale, and the lender goes through a very thorough process to be assured that the homeowner has an acceptable reason for requesting the short sale, and that the Contract of Sale for the property meets certain minimum financial requirements for the lender itself. By virtue of the short sale process the homeowner is not allowed to take any money from the transaction, so the homeowner may not have a strong interest in what price the property sells for. For this reason, the lender carefully scrutinizes every short sale offer, and recent history has shown that more short sale contracts are denied than are accepted. The number one reason for these rejections is low offers that would leave the lender in an unacceptable financial position.
If a buyer really has an interest in a property being offered as a short sale, the buyer should work with his Agent to determine what the true market value of the property is and make an offer from this starting point. Unreasonably low offers waste the time of both the lender and the seller and can result in both the buyer and the seller missing the short sale opportunity. To the seller this can potentially mean foreclosure or bankruptcy, and to the buyer it can mean missing out on a good value on a property often in excellent condition.