While the number of short sales has surged in recent years, closing on such transactions still poses plenty of challenges along the way that can threaten to derail the deal.
Real estate professionals told the Los Angeles Times that negotiations remain a sticking point in these transactions because sellers can agree to any amount on a home sale but it’s the lender who ultimately has the final say. Compounding the issue, many lenders also are still reluctant to even discuss a short sale with a seller until a purchase contract is in place.
“That means the buyer who makes the first offer is a guinea pig, because nobody knows whether the lender will even accept a short-sale offer,” the Los Angeles Times reports.
Sometimes short sales are listed at a “ridiculously low price” to start getting offers in and to begin the negotiations with the lender, according to the National Association of Exclusive Buyer Agents. But even if a lender initially approves a short sale, it’s not fully binding yet and the lender can still easily back out of the transaction, NAEBA reports.
Another big hurdle agents report with short sales is that once lenders do approve a short sale, they tend to require it to close within a short time frame. But that short time may not provide enough time to the buyer to have the home examined by a home inspector. A home inspection is crucial to ensure you’re investing in a valuable property. The results of the inspection will tell you what kind of repairs the property needs. The home inspector may find leaks on the roof that would require professional roof repair services. If there’s a septic tank in the property, the home inspector will also check its condition. Residential Septic Tank Repairs will be recommended if there are damages on your septic tank. Furthermore, plumbing issues such as clogged drains must be dealt with. Contact a drain cleaning company to get rid of any blockages in your drains.
Some buyers, therefore, may opt to have an inspection done on the home prior to a lender’s approval of the short sale. However, if the lender rejects the offer, the buyer could lose the money they paid for any inspections. Buyers also could lose the upfront money they spent on credit reports, application fees, and the appraisal if the lender later drops out of the deal.
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