Buying Short Sales

A home or condo that is listed as a short sale means the owner has to sell his/her property for less than the amount he/she owes to the bank on the current mortgage. In order to do this, the owner must have approval from the lender. The seller and the buyer will negotiate a contract and then the mortgage holder must approve the contract as well. This approval process can often takes weeks or months to complete. In Central Ohio, buyers must sign a form that states that they are aware of the challenges a short sale purchase can have. A short sale can be a demanding process, but it very often leads to a happy buyer and a thankful seller.

Short sales are typically granted when the seller has a hardship reason. The seller is probably fighting off foreclosure and cannot be held responsible for the difference in your offer and what they owe the bank. The bank is under obligation to obtain fair market value for the property so generally will not entertain a "pennies on the dollar" offer. You can still negotiate a great deal, though, IF you can be patient. Some short sales take 5 weeks, some take 5 months.

There are a few steps you can take when you are considering making an offer on a home listed as a short sale.

1. Choose a licensed realtor with experience in short sale property.
2. If you are looking specifically for a short sale property, look for wording in the listing such as:
"offer has to meet seller's bank approval" or "short sale."
3. Once you have found a home you would like to make an offer on, work with your realtor to
make your offer acceptable to the lender. Get a comparative market analysis and make your offer
based on that number. The lender will be more willing to accept an offer that is close to the
appraised value, which should be fairly close to the comparative analysis.
4. If you have any legal questions or concerns about your contract or the process, seek the
assistance of a real estate attorney.