What You Need to Know Before You Buy a Short Sale in San Mateo
One particular category of homes for sale are those in the pre-foreclosure stage. That is, the owner is behind on his or her mortgage payments, but the lender has not yet begun foreclosure proceedings. Among this segment of the market are a special group of homes that the industry has labeled short sales. A short sale occurs when the lender agrees to accept less than the amount owed by the borrower to facilitate a sale and thereby avoid foreclosure.
Many people believe that buying a San Mateo short sale property can reap profits not available in conventional transactions. While it’s true that buying a San Mateo home for less than the amount owed can be profitable, it is neither without risk or uncertainty. In fact, San Mateo short sale transactions are among the most risky and uncertain endeavors in San Mateo real estate. Here are just some of the things you need to know before making an offer on a San Mateo property that is worth less than the amount owed to the lender.
San Mateo Short Sales Requires TWO Approvals
The San Mateo short sale must be approved by the lender and the owner. Sometimes the lender approves the short sale with conditions which are unacceptable to the owner. The owner can then decide not to sell you the home and rescind the contract.
San Mateo Short Sales are Full of Uncertainty
There is no certainty that the transaction will close escrow, even if the seller has accepted your offer. Remember, the lender is the prime decision maker because the owner is asking the bank to take less than what they are owed.
Seller’s Hardship Must be Demonstrated
The owner must demonstrate a financial and/or emotional hardship. Death, divorce and job loss are genuine hardships; simply owning a San Mateo home that is worth less than the outstanding mortgage balance, is not.
Seller’s Hardship Must Be Thoroughly Documented
The seller must carefully document the hardship and abide by the lender’s process. Most lenders will not even look at an incomplete package, so sellers who expect a favorable response must follow the lender’s checklist carefully.
Lender is Looking for a Market Value Sale
The lender will appraise the property to compare the sales price to the most recent sales of the most similar homes sold in the vicinity. The lender is looking for a market value sale, if at all. Remember, they don’t have to agree to sell you the home at the price you and the seller have agreed. They can (and do) choose to take the property back in foreclosure and sell it themselves.
All Proceeds from the San Mateo Short Sale Go to the Lender
The seller may not receive any cash from the sale. Except for customary sales expenses, such as real estate commissions, all proceeds go to the lender.
All San Mateo Short Sales are Sold “As-Is”
All San Mateo Short Sales are sold “As-Is,” that is, they are sold in their present, existing condition. What you see is what you get. FHA purchase offers requiring repairs are not the best candidate for a San Mateo short sale.
Patience is a Virtue When Buying San Mateo Short Sales
San Mateo short sales take much more time than conventional sales. Buyers and Realtors? must be patient. However, for a buyer, patience can mean opportunity loss should another property come along that is more desirable and attainable.
Protect Yourself
Buyers looking to buy San Mateo short sales should, for their own protection, insert performance time deadline which would allow the buyer to cancel the contract should they decide to do so.
Carefully Evaluate the Physical Condition
Buyers should conduct a general home inspection and a pest inspection to carefully evaluate the physical condition of the property and minimize the risk of buying a lemon.
Reduce Your Risk of Loss
Buyers should put up as little as possible for earnest money to reduce their risk of loss should the transaction implode. One percent of the purchase price is more than enough.
How Can One Increase Chances of Success?
Patience, attention to detail and having realistic expectations greatly influence the likelihood of success or failure of a short sale in San Mateo.
Who Should Not Pursue a San Mateo Short Sale?
A San Mateo short sale should not be pursued without professional representation by a qualified and experienced real estate broker. Short sales are not for beginning buyers or beginning real estate agents. The risks far outweigh the potential rewards.
Are San Mateo Short Sales in Your Future? Call Us!
If you would like to discuss pursuing short sales in San Mateo County, give us a call at (650) 655-2500 or send us an email at info[@]RayChelRealtyGroup.com. With our over 30 years of experience in both good and bad markets, we can help you structure a deal that will have the highest possible likelihood of closing with terms you can live with.
San Mateo County Short Sales for Sale
Click on the map below to search San Mateo County short sales.
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