Short sales can present a golden opportunity to pick up a bargain home
The Boston Globe recently reported that the rise in housing prices that began during the nation’s recovery from the Great Recession has begun slowing down somewhat. Indeed, the median price of a Massachusetts single-family home is actually down slightly in comparison to prices one year ago. Moreover, the volume of single-family homes sold in Massachusetts is also down just a bit from this time last year. Nevertheless, there is no question that home prices have rebounded significantly from what they were during the height of the Great Recession.
Although home sales may be marginally down from this time last year, the housing market in this state remains strong and the prices of homes reflect both low inventory and pent-up demand. Bargains still exist for both the first-time homebuyer and those who have experience buying and selling homes. Realtor Magazine says that, if you want a true bargain, “you should consider a short sale.” A short sale occurs when a home is being sold for below what the current seller owes on the property and the seller does not have other funds to make up the difference at closing. Distressed homeowners sometimes resort to a short sale in order to avoid a foreclosure.
Unfortunately, short sales of homes are not as common as they have been. According to both Realty Trac and the Wall Street Journal, short sales of underwater homes have fallen sharply this year. In part, short sales have tumbled due to rising home prices which have pushed many homes back above water. Nevertheless, millions of homes across the nation remain underwater, and some owners still turn to short sales as an alternative to a foreclosure. A short sale depends upon two things. First, you must have a willing seller. Secondly, the seller’s lender must prefer the short sale over a foreclosure.
Tips on short sales
Realtor Magazine advises that you may be a good candidate for a short-sale purchase if you are an extremely patient buyer. Remember that after you arrive at an agreement with the seller, the lender will have to approve the sale before you can close. If there is more than one lender, it may take months before all the lenders sign off on the sale. In addition, if you are seriously considering a short sale, you need to make sure that your financing is in order. Keep in mind that, for short sales, lenders often prefer cash offers. If a cash offer is not possible, it helps if you: (1) are preapproved for a loan; (2) can make a large down payment; and (3) can close at any time.
The process of buying a short-sale home may not go as smoothly as you would like. For example, be aware that if you make an unusually low-ball offer for the property, the lender will probably balk and you will have wasted your time. In addition, a problem might arise if the lender insists upon the seller signing a promissory note to repay the deficient amount of the loan. Lenders have also been known to demand changes to contracts buyers negotiated with the seller which the buyer may be loath to accept.
Seeking legal advice
If you have an abundance of patience and desire to purchase a short-sale home in order to pick-up a bargain, you should contact a Massachusetts attorney. An attorney experienced in handling real estate matters can help guide you through what may be a lengthy but ultimately financially rewarding process.