A Great House At a Great Price
Your decision is finally made you are prepared to take the leap and buy a house. Buying a home will definitely be one, if not the biggest purchase you will ever make. After going through your finances, and deciding what you are willing or how much you are able to get a mortgage, finding the right home in your price range can be a challenge. You definitely want to find a home that has the things you are looking for and one that you can afford. This is when you have to realize you make have to make some compromises.
Before you start looking at homes to purchase, you should figure out how much you can afford and what your credit rating is. Having good credit is a good thing to have because that is a large part of determining your interest rate. The better your credit the more you may be able to borrow and your interest rate will be lower, which means lower monthly payments. If you have good credit and saved for a down payment and you still can't seem to find a house in your price range, maybe a short sale is something to consider
A short sale is a pre-foreclosure, known as a distressed property. These homes are available because the seller can no longer mortgage payments and is trying to negotiate a deal with the lender to avoid having the house go into foreclosure. With this sale, the lender agrees to accept less money than the amount owed on the mortgage. A short sale could be great, because you get to pay less for what the house is worth, but of course there will be some cons in buying a short sale.
One of the challenges of a short sale is the amount of time it takes to complete the sale. Because the bank has to approve the offer - not just the seller, as in traditional home sales, agreeing on a price and settling on a buyer is more complicated and time consuming. If you are on a time crunch need to be in the home on a certain date, this most likely is not the best route.
Another thing to consider of short sales that you are buying the property "as is," meaning you are now responsible for all of the repairs or problems the house may have. Since the seller is having financial difficulties it can be hard to get any "extras" covered in the closing.
It's also a good idea to work with a real estate agent who is familiar with the difficulties of a short sale and is willing to take a cut in commission if those are the lender's terms. But it can sometimes be hard to find an agent who is willing to work on a short sale, and even more difficult to find one with a lot of experience with short sales.
A short sale home is likely to be offered at a bargain price. Of course depending on the local market, but a pre-foreclosure property is almost always cheaper than one sold the traditional way. Getting a nice home at a low price may be enough of an incentive to help you get over the list of cons.
Also, in comparison to foreclosed properties, the short sale home has many advantages. It is likely in better condition and move-in ready, which needs less beginning costs from the buyer. You will also receive disclosure information from the bank, which can help you make your decision.
It's important to be patient and flexible to get through the short sale process. If you really like a home and are willing to go through the short sale, you could get a great house at a great price.