Short Sale Killers and Pitfalls
There are many roadblocks which can derail a short sale. With extra research, a buyer should be able to uncover the possible obstacles and plan for them.
- The short sale process may take more time than a traditional retail sale to complete and it may be difficult to pin down a firm closing date until the
seller's mortgage lender(s) agrees to the short sale. Junior-lien holders such as second mortgages, HELOC lenders and other special assessment liens may also need to approve
the short sale. If a buyer is bound by a specific timetable to buy a home, the short sale may not be an ideal route.
- You are buying the property on an "as is" basis.
- The seller of the property will normally have to pay some money at closing or agree to an unsecured debt in order to have the short sale approved. If the seller refuses, then a short sale may fall through even if the seller has approved the sale.
- The approving lender will rarely agree to pay for any extras that a regular seller would normally agree to. This could mean higher closing costs for the buyer. The buyer will need to shoulder those costs. (For example, the buyer covers the cost for inspections and repairs).