What is a short sale anyway? Simply put, a short sale occurs when the balance of the mortgages(s) is more than the purchase price of a home and the bank(s) holding the mortgages(s) agree to take less than the balance of the debt. Sometimes, back taxes, HOA payments, Condo Fees, and other liens are also part of the short sale. These liens are generally paid in full at the time of closing. Sometimes buyers of short sale homes come to the closing table with additional funds to pay for these liens, as they are not “forgiven” and the banks are not responsible for them.
Is a short sale a good deal? That depends. Buying a short sale is not for those who have great expectations or need to close on a home within a particular time frame. Multiple offers may be submitted to the bank and there is really no way of knowing where your offer stands unless the bank responds to your offer.
Once the bank accepts an offer it goes to the actual lender who must also accept it. If an inspection is part of the contract the bank has no requirement to make repairs or reduce the purchase price. The bank may also ask the seller to sign a note for the entire balance owed or a portion of it. If the seller declines the deal may be off. Sometimes this happens at the closing table.
If you are willing to take a chance and can patiently wait, up to a year in some cases , you are the right type of person to buy a short sale.