What is a short sale?
A short sale happens when a home owner owes their mortgage company an amount greater than their property is worth and they’re having difficulty making payments. The home owner asks the mortgage company to allow them to sell the property at a price below the mortgage balance, and in exchange, the mortgage company agrees to forgive the rest of the debt so that the seller isn’t forced to go into foreclosure. Keep in mind that when you make an offer for a short sale, it’s the mortgage company that’s in control of the deal and they decide whether to take your offer and under what terms.
How is a San Jose short sale different from a foreclosure or a REO (Bank-owned)?
A foreclosure occurs when a homeowner is unable to keep up with their mortgage payments and ultimately has to default on their loan. Eventually residents of a foreclosure are evicted and the property may sit empty for some time. The only way to buy a foreclosure is at a foreclosure auction on the county courthouse steps. Homes at foreclosure auctions are sold “as is” and often have damage from previous owners and neglect while unoccupied. Usually, most foreclosed homes auctioned do not have bidders and the bank holding the mortgage takes ownership of the house.
An REO is a property that a financial institution (such as a bank) acquired because the property didn’t sell at the foreclosure auction. The bank retains a real estate agent to list the home on the MLS and you purchase REOs very much like buying from an individual, except that the bank usually will not invest in repairs or improvements to the home to help it sell.
Why should I consider San Jose short sales?
Typically, San Jose short sales are sold at a lower price than the market value. Though you may have to contend with other bidders, you can make out with a great bargain if the contract is negotiated properly.
Are San Jose short sales difficult to purchase?
San Jose short sales require more paperwork, negotiation, and effort than a regular sale, but the discount you could receive on the home may be worth the effort. A real estate agent who is experienced in San Jose short sale transactions can help you find bargain priced short sale properties, make an offer and complete the paperwork required, and be your liaison between the bank and seller’s real estate agent to make sure you don’t have to do the legwork.
How long does it take to buy a San Jose short sale?
The amount of time a San Jose short sale can take varies, but don’t look at short sales if you have a hard, short deadline for moving. Some buyers have reported waiting up to 6 months to close escrow on a short sale home. Banks are making significant investments to improve the short sale process and many buyers are experiencing a smoother short sale recently.
Frequently, both the buyer and the seller are waiting for the bank to approve the offer. In most cases, the bank will go with the strongest offer, but they will also deliberate each offer received before coming to a decision. The wait-time can be frustrating, so you should consult an agent on the many factors that can affect the speediness of the sale.
Do I need a real estate agent to buy a San Jose short sale?
A buyer’s real estate agent is not required for any sale, but purchasing a home without a real estate agent is similar to going to court without a lawyer. Sure, you can represent yourself, but do you know all of the laws and bylaws, or possess the years of negotiating experience that may help you win the case? A short sale is many times more complicated than a regular sale, so chances are you’ll miss an essential detail that could cost you money, get you into a lawsuit or cause the deal to fall through. Even if you get it right, short sales often require 10′s of hours of follow-up on details and paperwork and your agent will take most of that burden. Having a real estate agent is definitely recommended when negotiating a San Jose short sale.