Could a short sale purchase be right for you?
A short sale is when the seller owes more to his or her lender than a property is worth. The buyer purchases the property from the owner/seller, but the purchase contract is subject to approval by the owner’s lender.
The Park City short sale pickings are slim, but there are still a few good deals out there. Distressed sales (short sales and foreclosures) in the Park City market account for less than 15% of all sales. This is the lowest level since 2007. Statistically, short sales are discounted about 13% off retail. This can be a significant savings. Some criteria to decide if a short sale purchase is right for you:
- You are not bound to any time frame. This year, I closed two short sales. One was approved by the seller’s lender in one month. The other took 2.5 months. Both of the sellers were in default of their loans and near foreclosure. I have also been involved in short sales that took 5 months for bank approval. You never know how long the process will take and the agents have little control over the speed in which the lender will act. If it is a property that must be purchased within a specific time frame, I would advise against a short sale.
- You are buying the home “as is” in a short sale, so the property should be in relatively good condition. I showed some buyers a short sale condominium yesterday that was used as a rental. The carpets were filthy, there was a pet odor, and the discount off retail did not seem substantial enough for the buyers to purchase the property.
- You must have your financing or cash available and be ready to close quickly. Yes, the bank will take its time approving the short sale, but it is definitely a case of “wait, wait, wait, then hurry, hurry, hurry”. Once the seller’s lender approves the terms of the short sale, they will want a very quick closing.
Short sales can be mutually beneficial to both buyer and seller. The buyer gets a great deal and the seller avoids foreclosure. Short sales work when the buyer’s and property’s profiles line up. I wrote a short sale offer last week that meets this criteria.
For additional information about short sales, please send an email to nancytallman@gmail.com and I will forward you a document that covers all the details of the short sale process.
