Short sales are much different from the normal home sale process. Before considering or purchasing a short sale, it is essential that you understand what they are and how they work. This article contains some important facts on purchasing PA short sale listings.
Short Sale Basics
Short sales refer to listings where the sale price and expenses will not be enough to cover what the home owner would owe at closing, and the home owner has no savings to cover the difference. Expenses related to the sale may include the equity lines on the home, real estate fees, closing costs, and other applicable costs. The mortgage company on the home would be "short" what is due/owed to them, which is where the phrase short sale comes from. The mortgage companies currently holding the mortgages on the home for sale must each approve the short sale in order for it to go through. This is where it can get complicated. Lenders will not issue approval unless there is an offer from a buyer. Listings marketed as short sales can only be purchased if this approval is actually obtained, and there are no guarantees that it will be.
Pros of Short Sales
The amount of short sale inventory on the market has a lot to do with the real estate market. Sometimes, there may be an abundance of options. Short sale listings are usually an opportunity for prospective buyers to secure a lower price on listings. However, they may not work for all buyers.
Downside of Short Sales
Short Sale Timelines
Potential buyers must make an offer to purchase without knowing that the sale will be approved. It may also take significant time to receive updates on the approval status (typically a few months or possibly a year). Therefore, home buyers requiring to close before certain deadlines should not rely on short sales.
Repairs Required with Short Sales
Short sales usually need more work than normal sales. They are traditionally sold without any concessions for repairs since the owner can not afford to make repairs and the banks are already getting less than the balance owed. Buyers should anticipate needing to handle renovations with their own funds.
Purchasing PA Short Sale Listings
Short sales do not work for everyone. Prospective buyers should understand the benefits and risks prior to viewing or submitting an offer on them. For potential buyers with non-specific time frames and the ability to make renovations, it may be a great way to save money on a home. Speak with your buyer agent for additional information on purchasing PA short sale listings in your state.