Buying short sale vs regular sale

If you are debating about buying a short sale versus a regular sale, understand that the biggest difference may be the time it takes for both a homeowner and a lender to approve your offer.

Buying short sale vs regular saleIf you are debating about buying a short sale versus a regular sale, understand that the biggest difference may be the time it takes for both a homeowner and a lender to approve your offer.

A short sale happens when a homeowner owes more on the mortgage than the home is worth and the lender agrees to accept less than is owed. Therefore, both the homeowner and the lender must accept your offer. The lender may take months to approve your offer, depending on how many foreclosed homes and short sales it has.

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The market value of many homes dropped substantially in the past six years, so short sales are fairly common. If you are considering buying a short sale vs. a regular sale, know that you typically need to prove that you are pre-approved for a mortgage and have required earnest money when you submit an offer on a short sale home. Traditional home sales will require you to get mortgage approval, but it can be done after you find a home, whereas, with a short sale, the process should be at least started before you begin your home search.

Also, if you intend to buy a home in pre-foreclosure, you should make sure the seller has permission from his lender for the short sale. Buying a home in a short sale is a lengthy process even after the lender has agreed to the sale. Time is a huge factor when dealing with the buying a short sale verses regular sale dilemma. Traditional sales take less time, normally a few weeks from offer acceptance to closing. A short sale can take several months because the lender has to approve your offer. Often a committee of people reviews and approves short sale offers, which may take even longer. If you need a home in a hurry, a traditional sale is probably a better option than a short sale.

Many people believe that a home sold in a short sale is cheaper than a home sold in a traditional sale. This is not necessarily true. Lenders want to get as much of their original investment back as possible, and they have already agreed to take a loss, so they will typically not accept lowball offers. 

A real estate agent who specializes in short sales can help you decide whether buying a short sale vs. a regular sale is a good idea for you. Your agent also handles the negotiations between the seller and the lender for you. If you need to find an agent, go to Reply! to connect with professionals in your area.

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