Buying a Short Sale Property in Connecticut

By
Real Estate Agent with Fab Real Estate

"Short Sale" properties are becoming more common in our area.

A short sale is when the seller is "short" on funds - they are selling a home for less than what is owed on the mortgage.  This occurs either because the market has declined and/or the home has been refinanced and cash taken out from the home.

Is a seller owes more than the home is worth in today's market, and they need to sell, they can attempt to have their lender approve a short sale.  Many lenders are now agreeing to - and approving - short sales under certain circumstances.  If the alternative is foreclosure, then it may be in the lender's best interest to approve the short sale.

However, there are issues with buying a short sale property that buyers need to be aware of:

  • Short sale homes are sold strictly in as-is condition.
  • Short sale homes are not necessarily huge bargains.  Lenders will have an appraisal done on the home prior to approving the sale, to ensure they are receiving fair market value for the home.  Otherwise, it may be more beneficial for the lender to foreclose on the home.
  • Short sales can take a long time.

Let's consider that last point a bit more:  Short sales can take a long time.

In ideal short sale situations - when the seller has already provided their lender with their financial paperwork and other required documents - it is still typical to wait for 4-6 weeks before the lender will even let you know if they accept your offer.

Yes, that means that you, as the buyer, will have to wait at least a month to find out if your offer will even be accepted by the lender.

So, if you're in a hurry to buy, or have a time line of when you want to be in your new home, then a home being sold as a short sale is not for you.  We have no control over how long a lender will take to approve the sale and accept your offer.

Buying a short sale property is not for everyone.
Be prepared to wait.  And then wait some more. 

I have a client who needs to be in their new home within two months.  We will not be able to consider short sale properties - their time frame for moving in is too short.

I have other clients who have an apartment they rent on a month-to-month lease.  They're willing to wait for the right place to call home.  For them, we are certainly considering short sale properties - they have the time to wait and are willing to do so.  Because of their flexibility, the homes available to them is greatly increased to include these short sale properties.

Are short sale properties for you? 
Consider your needs and your time frame.  Speak with your REALTOR and make an informed decision.  If you decide to move forward with a short sale home, just be prepared to be patient.  We'll work through it together!

Don Fabrizio-Garcia, REALTOR
Connecticut Real Estate & Appraisals
Keller Williams CT Realty
203.746.1199
Connecticut Real Estate and Homes for Sale

 

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Rainmaker
114,857
Ann Sabbagh
Seacoast Mortgage Corporation, RI (20021119LB & 20031576LL), MA (MC2107) & CT - Pawtucket, RI
President, Sr. Loan Officer

Don,

GREAT info on short sales!  I have been financing them and it has been an experience!  First time homebuyers are getting upset over the time delays.  My recent one is the listing broker did not submit to the short sale lender the 2nd P&S, which included seller concession for closing costs.  So, now the buyer needs to come up with the closing cost money OR suffer a higher rate, because the bank does not wish to change their numbers. 

Everyone in the transaction needs to be informed of how this all works and dot the i's so the buyers are not impacted in any adverse way.

Apr 24, 2008 07:23 PM #1
Rainmaker
315,901
Don Fabrizio-Garcia
Fab Real Estate - Danbury, CT
Owner/Broker/Trainer - Fab Real Estate

Hi Ann - I've seen a few short sale transactions fall apart because agents and/or buyers didn't know what to expect.  One recently:  the listing agent didn't have the financial paperwork completed at the time of taking the listing.  Then, the sellers decided they didn't want to complete the paperwork.  The deal fell apart, and my buyer needed to find another house.  That could have been avoided if the listing agent took care of the paperwork up front.

A lot of buyers think buying a short sale is the way to go right now, so they can "steal" the home.  But they don't realize the bank will order an appraisal prior to approving their offer.

Other buyers do not realize how long they may need to wait to even find out if their offer will be accepted.  I have one right now where we've been waiting about 4 months just for an answer from the lender.  Now, this deal did have some issues that arose, and is a bit unusual, but it demonstrates just how patient a buyer may need to be.

Apr 24, 2008 07:28 PM #2
Anonymous
homeinczechr
wow!amazing stuff regarding the short sales.this is a great information.
Apr 25, 2008 01:29 AM #3
Rainmaker
315,901
Don Fabrizio-Garcia
Fab Real Estate - Danbury, CT
Owner/Broker/Trainer - Fab Real Estate
Anon - There is a lot to know when dealing with short sales.  Buyers and sellers must be educated on the process.  They're not for everyone.
Apr 25, 2008 09:03 AM #4
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Rainmaker
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Don Fabrizio-Garcia

Owner/Broker/Trainer - Fab Real Estate
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