As thousands of would-be buyers have discovered, short sales can be a long shot.
Though selling houses for less than the amount owed on the mortgage has become commonplace, accounting for the lion’s share of transactions in many markets, such sales are fraught with complications that can short-circuit the deal. There are no, uh, shortcuts.
Here, courtesy of members of the National Association of Exclusive Buyer Agents, is a short summary of the ways in which a short-sale purchase can be derailed:
Often the house is not advertised as a short sale. That’s like advertising a house that is not really for sale, because the seller does not have the authority to sell the house at the advertised price, says the Phoenix-based association, whose members work only on behalf of buyers.
The negotiating process is far different in that the seller may not care how much is being offered since he won’t be taking any money from the sale. The seller may be so anxious to get away from his underwater mortgage that he’ll accept just about any offer. But the bank has the final say.
Many lenders will not even discuss a short sale with a seller until a purchase contract is in place. That means the buyer who makes the first offer is a guinea pig, because nobody knows whether the lender will even accept a short-sale offer.
Short sales are sometimes listed at a “ridiculously low price” just to get the ball rolling, the association warns. Similarly, a seller may agree to any offer, no matter how low and no matter whether it has a snowball’s chance of being accepted by the bank, just so he can begin negotiations with the lender.
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