1. Sold “as is”: Good luck try to find a short sale home that is move-in ready. Since they are sold “as is” you have to have to money to spare for all the fixing up you will be doing.
2. Response time is slow: There is an unusual amount of paper work involved in a short sale that could delay the response times of any offers you put on the house. Some buyers are lucky and can receive a response in a couple of weeks. More often than not, buyers will have to wait months before hearing back from a lender regarding their offer.
3. Lenders can change conditions of the contract: Contracts can be changed at the last minute with short sales. Be prepared for more negotiations as new laws get passed or as the market fluctuates if you work with certain lenders.
4. Closing costs are higher: It is standard practice for buyer and seller to spilt certain fees, but when it comes to banks, not so much. They will most likely not pay any closing costs, inspections or for a home warranty.
5. If you have a home to sell: Selling your existing home needs to coordinate with the purchase of your new home, if not, you could be out on the street. It is next to impossible to coordinate the close of your existing home with that of a short sale.
6. Banks need to approve the sale: The banks would rather take a loss by letting the house sit, than selling it less at a loss.
7. Stringent Qualifications: Inexperienced or unethical agents often talk sellers into listing their home as a short sell when the home owners don’t even qualify for a short sale! Sellers must have a hardship and provide the bank with tons of evidence of the hardship to the lender before they will even consider if it will be approved for a short sale. Some agent list homes as short sales without even talking with the lenders.
8. Lenders aren’t naïve at the value of the home. They will request a (CMA) Comparable Market Analysis and/or a (BPO) Broker Price Opinions. If the lender believes a better price can be obtained by taking the property back in foreclosure over a short sale, the lender may hold out for a higher price. Lenders accept short sales when the home is worth the short sale price, which is market value!
9. Some lenders won’t fund on short sales….simple as that
10. Length of time to close: After months of waiting for your offer to be reviewed and more months of counter offers, (If your offer actually gets accepted) you are looking at waiting again. You are on the lenders clock, not yours.
11. Banks that hold the note on the short sale can be bought out by another bank, sell their current loans (short sales included) , go out of business…Then, where are you and more importantly where is your earnest money deposit?
12. The banks don’t have to respond. If they do respond by rejecting your offer, don’t bother increasing your offer $1,000. Increase it to market value or forget it.
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