A short sale home is a home that being sold for less than what is owed on it by the home owner with the approval of their mortgage company. This definition is no different for homes in Arizona versus any other state. Under normal circumstances, a home owner doesn’t need the permission of their lender to sell their home because under “normal” conditions the home seller is selling the home for more than the mortgage balance owed. With needing the bank’s approval, short sale transactions are far from normal when it comes to how real estate is bought and sold.
Buying a short sale, however can have its advantages and disadvantages. Below you’ll find some brief summaries of the pros of buying a short sale, the cons of buying a short sale, and some tips about buying a short sale that should help your efforts.
The main advantage, or pro, to buying an Arizona short sale home is the opportunity to get a good deal. Couple buying a really good deal home with getting a VA loan and really low VA rates (or any interest mortgage interest rate for that matter here in the fall of 2011) and a short sale could set you up for a rather attractive mortgage payment moving forward. Another pro about buying a short sale versus a foreclosure for example (foreclosures can be even better deals than short sales but often come with higher risks) is that the condition with a short sale is better – in general – than a foreclosed home.
The main disadvantage, or con, when buying a short sale home in Arizona is that you have to deal with the time that it takes to get the lender’s approval. You will also have to deal with the uncertainty that the lender will take your purchase offer. You could wait around for months only to find out after the wait that they didn’t accept your offer. Hopefully, they will give you some type of offer, but they don’t really have to.
With the major pros and cons discussed, let’s look at a quick list of tips you should pay attention to to help your short sale home buying process go smoother.
- Don’t pay upfront fees – if you get asked to pay your agent any type of upfront fee in order for them to represent you – you should look for a new agent.
- Communitcation is key – make sure you speak to your buyer’s agent about getting updates on a regular basis. Set the tone early in your working relationship to get your expectations known and understood. Long delays foster a rockier process so insist that you stay in touch.
- Don’t low ball – if you don’t make a reasonable offer, you’ll likely wait around for nothing but a declined offer. Banks don’t have to take your deal if it is too low. They always have the option of foreclosing on the home and selling it for what they want to sell it for. Be reasonable about your offer. You may even want to get an appraisal done ahead of making your offer so you get a good basis for your purchase offer price.
- Experience counts – make sure you work with an experienced real estate agent who has some short sale transaction experience. Ask for some referrals for clients they worked with to purchase short sale homes. You will need the experience to guide your journey so don’t hire your friend’s mother’s sister just to be nice if she hasn’t any short sale experience – your sanity and time are yours and precious.
Jason Spitler
