Distressed Property Buyers Will Need Patience

While there are far fewer short sale and foreclosure properties available than there were even a few months ago, you may still find one you’re interested in. Be aware, however, that the process of financing a distressed property (a foreclosure, or a short sale home) is somewhat different from financing a home in the traditional way.

To clarify, with a foreclosure property the lender has started the process of taking it back from the current owner. If the process has completed itself, the property will most likely be vacant.

A short sale property is one in which the occupant attempts to sell it, as he or she can no longer afford the mortgage. The occupant’s lender works with him or her to find a buyer in hopes of avoiding the expensive and time-consuming foreclosure process, which would be the lender’s next step if a sale doesn’t happen.

In either case, your real estate attorney will be handling much of the legwork in dealing with the lender, who is also the seller at this point. The process of selling a distressed property requires more time and documentation than a traditional sale, and buyers will need patience.

Short sales, especially, can take time, as lenders have exhaustive processes requiring huge amounts of documentation from the property’s seller.

The document outlines the seller’s financial position and shows why he or she can no longer afford the property; in other words, it explains why the seller needs a short sale.

Often properties that are vacant and have been vacant for some time (especially those in colder climates) may come with “as is” clauses in the contracts, meaning that the seller/lender won’t be liable for any future issues arising from the condition of the property.

The buyer will, however, have the opportunity for a home inspection after signing the contract, but before moving forward with the purchase process.