Short Sales: Answers for First-Time Buyers | Trulia Pro
Short Sales: Answers for First-Time BuyersMarch 2, 2012
Many people in the market today are first-time home buyers who would not have been able to buy when home prices were higher. Enticed both by lower prices and bank promotions, these eager hopefuls are have taken the signs of deals as the best chance to make their first real estate move .While all home buyers need help with the short sale process, it’s especially challenging to address the needs and concerns of a first-time home buyer who has decided a short sale is the home for them. Here’s how to get answers to first-time home buyers’ top three questions about short sales.
1. How long does it take for a bank to approve a short sale? This is the million-dollar question. While it takes an average of three to six months, the timeline – and the process – vary quite a bit from one bank to another.Short sale approval timelines depend on the bank some just take longer than others. While each bank has different short sale guidelines, the short sale has to make sense to the bank. The more sense the short sale offer makes to the bank, the faster the approval process.Here are some things that slow down the process by several weeks or more – these usually involve more people or more factors:Multiple liens on the propertyA third party negotiating the short sale on behalf of a seller. Some states allow third parties to do this, for a fee; some states, like Virginia, limit this to real estate licensees, attorneys, and employees of attorneys. Private Mortgage Insurance PMI on the propertyAdditional investorsAction: To make an accurate prediction about the short sale timeline for a particular property, research the bank’s general timelines, the property’s liens, and whether there is PMI before writing the offer.
2. Will the bank make repairs to the property? The short answer is, probably not.Here’s why:The bank does not have possession of the property and has no authority to make repairs on behalf of the seller.Many short-sale sellers do not have the financial means to make repairs.Many banks require the short sale to be sold strictly “as-is” and do not allow the seller to pay for any repairs.Why wouldn’t a bank allow the seller to make repairs? your buyer may ask. A short sale is a sticky situation for a bank, and that the bank wants to avoid potential liability. For example, if the bank allowed the seller to make repairs and the repairs proved to be faulty, the buyer might potentially hold the bank liable, since the seller doesn’t have money which is how the short-sale situation came about in the first place.Action: Find out how the bank and the seller feel about making possible repairs. A short-sale buyer needs to understand that the home will most likely be sold strictly “as-is” and all repairs will be at their expense.