Purchasing a single-family home or condominium through a Short Sale can be a lucrative strategy, with potential cost savings to the buyer ranging from a few thousand dollars to hundreds of thousands of dollars. 

Some home owners find themselves suffering hardships which limit their ability to meet their debt obligations, including mortgage payments.  The potential reasons behind financial hardship range from sudden job loss to illness to divorce.  What remains constant, however, is a lender's reaction when home owners begin to fall behind in their mortgage obligations or enter some stage of pre-foreclosure.

In an attempt to avoid the considerable financial costs and losses associated with foreclosing on a property in mortgage default, many banks and lending institutions are increasingly turning to short sale transactions. Traditionally, in a short sale transaction the lender will accept a payoff for less, sometimes considerably less, than what is owed by the current home owner on their outstanding mortgage. 

In other words, the lender is accepting a payoff "short" of what it is owed to satisfy the home owner's mortgage balance.  While short sales are not new, nor exclusive to specific types of property or borrowers, they do require the expertise of a qualified REALTOR and can be extremely time-consuming and detail oriented. 

All parties the involved in a Short Sale transaction, especially buyers, need know what to expect ahead of time and set proper expectations.  Once again, it is critical that both buyers and sellers seeking a Short Sale transaction work with a qualified, licensed REALTOR, familiar with the short sale process, potential pitfalls and caveats. 

Remember, once a homeowner in Arizona defaults on a debt secured by a real estate (mortgage) and a "Notice of Trustee Sale" recorded with the County, a lender may legally "foreclose" on the property in as little as 90 days!  Therefore, time is of the essence in all short sale transactions.  

Despite these rigid time lines, most lenders prefer to sell a defaulted home owner's property instead of moving forward with a foreclosure.  However, contrary to what some may believe, lenders will not simply "give away" or foolishly discount a property through the course of a short sale transaction.  Most lenders will seek as close to current market value as possible when presented with a Short Sale offer. In fact, many lenders have standardized guidelines as to how far below market value they will sell the short sale property for.

In today's market, lenders typically look for Short Sale purchase offers from QUALIFIED buyers somewhere in the range of 82-85% of the property's current market value - not outstanding loan balance.  The lender will, in most cases, conduct an independent appraisal on the property, known as a Broker Price Opinion (BPO), that verifies the property's current market value.

This means a qualified buyer could potentially purchase a Phoenix area home currently valued at $200,000 for a little more than $160,000.  Remember, the lender's discount guidelines are based on current market value, NOT the amount owed on the existing mortgage.

Buyers intending to occupy the property, either as a primary residence or second home, increase the likelihood of a lender accepting a Short Sale offer.  Buyers looking to make low-ball offers for a fraction of the current market value, in many cases, minimize their chances of the Short Sale offer being approved by the lender. Not to mention, the seller loses valuable time working with an unlikely buyer. Listing the property with a licensed REALTOR and Short Sale Specialist provides both the buyer and seller with the best opportunity for securing lender approval and a successfully closing the transaction.

So, what do Short Sale buyers need to know?

Buyers need to know that Short Sale transactions do require patience.  It may take anywhere from several weeks to months to complete the transaction. In addition, Short Sale buyers should be be qualified, with pre-approved financing in place, before their purchase offer is submitted to the lender. 

If the buyer is paying cash for the Short Sale property, the lender is going to require proof of funds.  If the buyer is financing the property a certified commitment letter from a qualified lending institution will be required.

A buyer offering to close quickly with a substantial down payment is more attractive than one seeking 95% financing in most cases.

Buyers may not want to spend money on a home inspection or appraisal until after the Short Sale is approved.

Buyers should expect to buy the home in it’s "as is" condition. In many cases, the seller does not have the financial ability to make needed repairs and the lender will not want to absorb the additional expense of paying for such repairs.

In all cases, qualified buyers seeking to purchase a Short Sale property should work with licensed REALTORS knowledgeable about the Short Sale process. Inexperienced real estate agents may hinder a Short Sale transaction, specifically when negotiating directly with the lender.

We highly recommend that buyers work with licensed Short Sale Specialists, such as the REALTORS at Mira Vista Properties Realty Group.  Our staff are both experienced and specifically trained in Short Sale transactions, providing our clients with more than thirty years industry experience.  

Matching our buyer clients with the finest Phoenix area Short Sale properties available at significant savings!  Contact the Mira Vista Properties Team today! 

Let us prepare a custom list of available Short Sale properties in Phoenix metropolitan area and forward them to you immediately for your review.