For people who are looking to purchase their first or second home, buying at a time when housing prices are low is very appealing. However, there is one issue that can commonly occur when trying to buy a home during this time: short sales.
A short sale occurs when the person selling the property isn’t able to recuperate the amount that they still owe on the home in the sale. When this happens, the lien holders must agree to accept less than the debt that is still owed, in order for the property to sell. Here are some of the issues with trying to purchase a short sale home…
Approval wait times
Getting a short sale approved can take quite a while, if you are seeking out a loan to do so. In general, you can expect to wait anywhere between 1 to 2 months, at least, for approval on a short sale. Sometimes, these wait times can stretch all the way out to a year, or even longer.
The problem with this amount of waiting is that the interest rate that you thought you were going to get on a home could easily change, for better or worse, which could mean that you no longer qualify for your loan, even after you are approved to be able to buy the home. That level of uncertainty can make some people skeptical about going for a short sale.
No guarantees on repairs or closing costs
In an ideal scenario, when you make an offer on the house, you can make sure that the seller of the home is obligated to fix certain aspects of the home. However, for a short sale, it can be hard to get these obligations down. This means that you could end up getting a home that is less functional than you initially hoped for. In addition, you are almost never going to find a short sale where the seller is willing to cover the closing costs of buying a home.