As we have all watched the national housing market work through difficult times in the last few years many have realized it to be a good time to buy. With mortgage rates at all time lows and a wide variety of inventory we agree that it is a great time to consider purchasing. There has been a lot of buzz that purchasing a short sale home is the best avenue for getting a deal. Although it is possible to get a great deal on a short sale, we believe there are numerous other avenues to finding a great home at a great price. Let’s explore some common questions and answers about short sales.
What is a short sale? A short sale occurs when the current owner of a home is negotiating with their current lender to accept less than the full amount of what is owed on their mortgage as a payoff. This gives homeowners the opportunity to put their home on the market at prices that may be lower than when they purchased and helps them to avoid a foreclosure if they are having trouble making their monthly mortgage payments.
Are short sales deeply discounted? Not in most cases. When a homeowner begins the process of negotiating a short sale with their lender the first thing they are usually told is get an offer to purchase and then we will negotiate. Often, homes will be put on the market at a lowered price to encourage offers with a disclaimer that the final price will have to be approved by the seller’s lender. Once there is an offer on the table the bank will usually request a comparative market analysis from two different agents to determine the current fair market value of the property. Most agents do price short sales at the current market value but this is not always the case. Though the seller is selling for less than they owe on the property the banks still look for offers that reflect the current value.
How long does it take for the bank to respond to an offer? This is the question with no true answer. Once you submit an offer the wait time for a response can range from thirty days to several months. There are many factors that go in to their decision-making process. They will require a large amount of financial information from the seller, the above mentioned comparative market analysis from an agent and sometimes an appraisal just to begin the approval. As they move forward other things may come in to play, such as a second mortgage or past due property taxes that will also have to be negotiated.
Will the bank or seller make repairs to the property? Not usually. In a short sale situation the bank does not own the property and cannot make repairs. Most homeowners in this situation do not have additional funds available to make repairs. In most cases a short sale property will be sold as is. We always recommend a home inspection by a qualified home inspector prior to purchase.
We still find that there are a wide variety of homes on the market that can be purchased at a great price whether they be short sales, foreclosures or traditional listings. Sevier County Tennessee has held a reasonably stable market through 2011 and moving in to 2012. There are a lot of properties to choose from and homes are moving. In an active market with low mortgage rates available it will be easy to find your Smoky Mountain home or investment property. Take a look at our website to see all that is available in the Sevier County real estate market.
Have other questions about short sales? I am a Certified Short Sale Specialist and would love to hear from you! Call, email or post your questions on our Facebook page.
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