If you’ve come across properties that are priced below the usual market value, those properties are most likely a short sale. A short sale is when a property is sold for less than its unsettled mortgage. The value of the properties put up for a short sale has usually dropped by 20% or more.
How does a short sale work?
A prospective buyer will have to make an offer to the seller, and also to the lender, and wait for their short sale approval letter.
Advantages:
Less competition with fellow buyers – Most buyers are not prepared to wait, and since the process of buying a short sale can take time, this trims down the number of prospective buyers that can make an offer on the property.
You may need to pay costs that are not included in the selling price – Included in these costs are the closing costs, which the lender will not agree to split. There may be additional costs as well.
You buy the house as is – Contrary to the norm of buying a property and asking for a decrease in price based on necessary repairs, price reductions for a short sale will usually be declined.. You can counteract this by including contingencies on home damage and repair on your purchase contract.
