Short sales are quickly becoming one of the most popular choices for distressed homeowners who are underwater in their mortgages. Though short sales are considered less of a blemish on your credit report than foreclosure, there are still four little known pitfalls to be aware of before selling or buying a short sale property in this current real estate market.

1) Hidden costs. Very few short sale sellers are aware that they may be financially responsible for paying off the remaining balance of their mortgage loan, and real estate agents who aren’t well versed in short sales may “forget” to tell you this. Make sure to speak with your lender directly to figure out if a short sale will affect your taxes, and if you will be required to pay back any delinquent balances or any fine print hidden costs.

2) Don’t hold your breath. Short sales are characteristically known for being a long process, so if you are looking to be rid of your house fast, don’t hold your breath! The lenders and banks can often take two or three months just to review the initial application, and that‘s assuming you‘ve turned in the proper paperwork. The short sale process can take anywhere from eight months to over a year if you don’t already have a buyer.

3) Access denied. Many struggling homeowners think that qualifying for a short sale should be easy, but some lenders don’t think being underwater in your mortgage or missing multiple payments is enough to be considered a hardship. So unless you’re unemployed, ill, going through a divorce, or are swimming in medical bills, you may find that access to a short sale will be denied.

4) Get your hammers ready. When a short sale is completed lenders lose money on the loans, and they end up paying the seller’s closing costs as well. This extra frontage of money usually means the lender will not pay for repairs to the home, and they become the responsibility of the buyer. So there’s a chance short sale buyers may get more than they bargained for and have to get their hammers ready!

Tags: , , , , , , , , , ,

This is filed under Short Sales.

     Twitter It!