Why a Short Sale May be Right for You

Home buyers who search for vacation homes in Orlando may occasionally come across a property that is listed as a short sale. This type of property may turn out to be a good investment. But it’s important that you understand what the short sale process involves, and whether it makes financial sense for you.

What is a Short Sale?

A homeowner who is struggling to make mortgage payments may decide to use a short sale as a way to avoid foreclosure. The homeowner sells the house for less than the amount owed on the mortgage. And as a result, the lender doesn’t get all of its money back. This usually happens when a home’s value falls, and only occurs with the lender’s permission.

The bank does not own the property in a short sale. But it must approve the sale because it is the lender, and will be taking a loss on the property. In that respect, it may appear as if the buyer is purchasing the property from the bank. Buying a short sale home is not without risk. Especially, since these transactions can be more time-consuming and patience-testing than a regular home purchase, or even a foreclosure purchase.

You can find some excellent prices on Orlando vacation homes that are being offered as a short sale. But before you close on the deal, here are a couple common short sale mistakes to avoid:

Common Short Sale Mistakes 

Ignoring Property Problems – Short sellers are motivated to sell and repair their credit. But they may not have kept up with essential maintenance on their homes, such as taking care of the roof, air conditioning and hot water heater. If the owners have been underwater financially for a while, they may not have gotten around to updating the home with new carpet, paint or kitchen cabinets. As a result, buying a short sale may save you money at closing. But you may have to spend thousands of dollars to remodel the home, especially if you want to position it as an Orlando vacation home rental.

Skipping the Home Inspection – Even though short sale homes aren’t usually in as a bad a shape as foreclosures, it doesn’t mean you should forgo having a home inspection performed. In fact, you should do one before making an offer, so you can walk away if it’s going to cost too much to fix any glaring problems. It’s wise to call in specialized inspectors to look for termites, mold and structural damage.

Being in a Hurry to Close – Buying a short sale home is going to take longer than you expect. Be aware of this before making an offer. Remember, the lender has to approve the short sale price. Banks tend to take their time because they don’t want to lose more money than they have to on the home sale. That means they won’t be in a hurry to sell if the offer is too low.

Dealing with an Inexperienced Agent – Make sure your real estate agent has experience with short sales. These deals are complex, so it’s important that you have someone working for you who is familiar with the process. Check with the listing agent to see if they have worked with short sellers. If so, they may be able to help expedite your transaction.

For best results, look for Orlando homes for sale that have been designated as “Approved Short Sales.” These deals can be completed in a more timely fashion, since the price has already been approved by the lender. This often happens when a previous deal to sell the home has fallen through.

Be prepared to close on time once you get approved to purchase the short sale. If you’re financing the purchase, get your loan finalized before the closing date. Banks rarely grant extensions for short sale purchases.

Team Donovan includes short sale properties in its online real estate listings. You can find them by selecting “short sale” under the “seller” notation during your property search. Our agents have a great deal of experience in these types of transactions, and will be able to successfully guide you through the short sale process. Contact us today at 407-705-2616 for assistance with your Orlando vacation home search. 

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