There are many homes for sale in the Santa Clara Valley that are “short sales”, meaning the mortgage is larger than the asking price. Other descriptions for short sale listings might be described with the phrases ”subject to bank approval” or “subject to lien-holder approval”. Rarely will you see “short sale”, so it’s best to be armed with some crucial information about short sales before considering buying one.
- In this type of transaction there is an additional party involved besides the buyer and the seller; the bank. The bank must approve the sale, and this can make the time to close much longer than usual. Expect it to take anywhere from four to six weeks. And once the bank’s approval is granted, they will expect you to be ready to close as soon as possible.
- You will need to pay for your own inspection which is always recommended. Since the sale is “as-is”, don’t expect the bank to make any repairs or offer any assistance with closing costs.
- You will also need to pay for your own appraisal. The bank will do their own as well, and have been known to reject the sale based on their appraisal. Also, they may ask the buyer to raise their offer before approving the sale.
- Deferred maintenance on the home is a potential risk for the buyer. Consider that since the mortgage payments were not being made, it’s highly likely that the homeowner was not able to afford regular home maintenance.