While the Real Estate Market has remained healthy and strong even despite the COVID Pandemic, unfortunately, there are many people who have fallen behind on payments, and short sales and even foreclosures may be a large portion of the 2021 housing market. While purchasing a Short Sale isn’t necessarily a bad thing, there are three main factors that you need to know prior to setting your heart on purchasing a Short Sale.
Is it a Fixer Upper?
Most short sales are not turnkey. While many people dream of purchasing a fully move in ready home, this is generally not the case when it comes to a Short Sale. Most Short Sales will need some sort of repair. Due to the property being a Short Sale, this means the previous owner didn’t have the funds to stay current on their payments and thus this often means that the funds to tend to, care, and maintain the property were also lacking. This could be as simple as a few cosmetic fixes and updates or as extreme as a full gut and remodel.
Does a Short Sale mean a Fast Sale?
The Term “Short Sale” unfortunately does not translate to a “fast” or “short time frame” when it comes to the actual sale and purchase of the property. Purchasing a Short Sale is actually a very long process and nearly always takes longer than purchasing a traditionally listed property. On average, from placing an offer to receiving keys or closing, purchasing a Short Sale takes an average of 4 months.
Can I Have a Small Down Payment?
Many homebuyers are budget conscious, especially first-time buyers and one of the ways that they do this is by using a small down payment. While there isn’t a legal reason you can’t use a small down payment when it comes to purchasing a short sale, the banks are more likely to accept an offer that is either an all-cash offer, or an offer that has a rather large down payment of 20% and above. Due to this, it is recommended to only tour Short Sale properties if you are prepared to offer a large down payment.
Related: Opening Escrow- What Does it Mean?
Whether you are looking for your first home, a fixer upper, or even an investment property, a Short Sale can be a great option as long as you are educated on all the potential dangers and rewards of the purchase. In conclusion, if you are interested in moving forward with purchasing a Short sale, remember to be patient as it will take time, ensure your finances are in order, and be prepared for the needed repairs and upgrades that may be needed.
Another main thing to make sure you are aware of is that a Short sale is not guaranteed. Oftentimes a Short Sale will be “managed” by more than one bank. This means that the property has multiple banking institutions that have a lien on the property. If this is the case, unfortunately it often results in the property going into Foreclosure, which in turn will not allow you as a buyer to purchase the home via Short Sale. A Short Sale is a gamble, while it can be a great opportunity for some, it is important to remember that it is never guaranteed and to proceed with caution.
If you’re currently searching for a new home, whether a short sale, foreclosure or traditional purchase, are ready to list your property, or have questions regarding Camano Island Real Estate, please feel free to contact our office at any time.
Additional Homebuyer Tips:
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- What’s considered a good interest rate
- What to Expect When Buying a Fixer-Upper
- 7 Simple Mistakes Homeowners Make
- The Best Landscape to Look for When Buying a Home
- 5 Reasons to Make a Move Right Now
- What Does Opening Escrow Mean?
- 7 Ways to Winterize Your Home