Buying a Short Sale Property in the Vail Valley

Upside Down

In a short sale, the seller is upside down on their loan-to-home value. This means the seller will not be receiving any proceeds from the sale unless the bank offers them a (usually fairly nominal) relocation check. While a short sale takes time and effort on the part of the seller, and represents a loss the the bank, both the seller and the bank benefit from avoiding the foreclosure process.

The primary downside for you as a buyer is you will inevitably be waiting a while for the bank’s approval.  Approval could take anywhere from 60-90 days, and sometimes much longer.  The Rocky Mountain Home Team has worked on short sales that have taken nearly a year for approval – though closer to 60 days is more common.

The benefit of purchasing a short sale property is they frequently sell for less than market value due to the buyer’s willingness to wait around for approval.  So long as time is not of the essence, the short sale process is actually pretty simple from the buyer’s side.

The first step is to negotiate the contract with the seller. Even though they’re not earning any money on a short sale, sellers will want to negotiate to as high a figure as they can in order to present a strong offer to the bank holding the loan.

Next, you will work through the standard due diligence deadlines – reviewing title documents, HOA documents (if any), home inspections, and so on – and complete any negotiations resulting from due diligence or loan applications.  This process is almost exactly the same whether there’s a short sale involved or not.

Once the due diligence deadlines are complete, the file is turned over to the seller’s lender to approve the short sale. As a buyer, you won’t have much to do at this time beyond wait.

Once the sale is approved, you will usually have between 30-45 days to close. If you are working with a lender, you then move forward to order the appraisal and obtain final loan approval. Once again, this process is almost exactly the same one you would follow on a non-short sale property.

To learn more about the short sale process, or to look for short sale properties in the Vail Valley, contact Michael Routh’s Rocky Mountain Home Team at 970-306-7711.  The Rocky Mountain Home Team is one of the Vail Valley’s top producing real estate teams. If you are looking to buy or sell Vail Valley Real Estate, we want to hear from you!

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