A short sale is a real estate transaction for the purchase of a home before a bank forecloses on it.
Short sales allow the owner of the home to sell the home below the market price and are subject to approval by the holder of the loan on the property.
A short sale home often has the owners still living there, with utilities turned on and before the bank has finalized the foreclosure and locked down the home, turned off the utilities and winterized the home.
How to finance a short sale?
First you must go about submitting offers on the short sale for the home you intend to buy through your real estate agent.
The offer then must be accepted by the lender.
You can make as many offers as you please and increase your bids if you like the house since your offers will either be accepted or denied. If your offer is accepted, the lender on the house that has accepted your offer will notify your real estate agent that they have accepted your offer.
At this point, your lender must send your real estate agent a letter of commitment for financing the home within 48 hours of your offer to purchase being accepted by the holder of the current mortgage.
Because short sales are typically done at prices below the market, you don’t have to worry about a high appraisal; you simply have to qualify for a mortgage in the amount that you are offering for the home.
If your lending institution is in agreement, then you should be able to purchase the short sale like any other home. Nevertheless, be advised that a number of problems can occur which can delay the closing of the short sale for a long period of time.
If the home has more than one lender for example, this may present a problem for the buyer despite obtaining the financing.