If you are the type who is always on the hunt for the best deal, a short-sale home may help you buy a home for a lower price than through a traditional home sale. Here are the top things you will need to know before investing in a short sale in Palm Springs, CA.
What is Buying a Short Sale Home?
To understand what a short-sale home is, and what it means to buy one, we need to first define how a home falls into the short-sale market. A short sale typically occurs when someone sells their home for far less than what they owe on the mortgage.
What is the Difference Between a Short Sale and a Foreclosure?
Short sales are different than foreclosures in that the lender or a third party purchases the home and the homeowner can be evicted.
How Can You Buy a Short Sale Home?
If you are interested in a short-sale home? If so, here is where to begin! Before selling a short-sale home, the seller needs to seek approval from the lender. Here are the following advantages and disadvantages of buying a short-sale home.
- Check if there are short sales in your area of Palm Springs. You can find applicable homes using a qualified short-sale home agent, either by searching online or looking through local public courthouse files.
- Research home values. Based on what you find in your research, if the seller owes more on the home than it is worth, this means there is no equity carried over.
- Visit the home. Look at the quality of the property to get a sense of how much you will need to fix up and estimate the costs so you will know what you get yourself into before it is too late to back out if you need to.
- Sort out liens with the lender. Before committing entirely as the owner, make sure all of the loose ends are tied up so that you are free to move forward once the sale has been made official.
- . Show paperwork and negotiate your terms. If you are using a short sale application, the seller's paperwork, or your financing plans, make sure everything is neatly together before submitting it to the lender. A lawyer or real estate agent might be able to assist you. If the lender is agreeing to sell the home for less than the original purchase price, prepare yourself to negotiate and determine the maximum you are willing to put down.
- Shop for a mortgage. Present your finances to the seller and the lender will prove your financial capabilities and can help expedite the process.
- Sign the dotted line. Once the seller, buyer, and lender are aligned you can officially sign the paperwork. After transferring the title and closing on the property, you will now be a new homeowner.
Advantages and Disadvantages of Buying a Short Sale Home
Buying a short-sale home has more steps than going the traditional route of home buying, but can come with its perks. As a buyer, you can get a home for less than its appraised value. The downside of buying and selling a short-sale home is that the deal may fall through. The seller's lender may not agree to list it as a short sale and as a buyer, there can be disadvantages ahead of you. As a buyer, short-sale homes are typically fixer-uppers, meaning you will more than likely have a lot on your plate once the deal goes through.
Buying a short-sale home is a fantastic way of doing real estate if it works in your favor, and can be worth the team effort, requiring compromise for all parties in the end.