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What you risk by waiting on a short sale!


If you are looking for a home to buy, or if you are considering purchasing a home that is being sold through short sale, there is something that you should definitely watch out for. This is something that I have never warned any of my home buyers about before as I have never thought it would be a problem. The thing to watch out for is CHANGING MORTGAGE GUIDELINES. during the 3 months while my buyer and I were waiting on our short sale offer to be reviewed the lender that we were using decided to change their guidelines and not allow them to use gift funds for their down payment to purchase the home with. Essentially the buyer is one point away from being able to use them. The guideline change was made about 2 months ago, which is after we pre-approved them but before we actually submitted their package to the lender. It didn't show back up until a few days ago as a condition of loan approval and now we have been pushed between a rock and a hard place. No time to fix the problem, and needing nothing other than time.

Had this been a regular purchase, pushing closing back for a few weeks would probably not be that much of a problem as these buyers don't have a home to sell, but since short sales work on different timeline than other sales, I am not sure if I will be able to hold this together. The entire short sale package might have to be resubmitted which could cause this buyer to have to wait another 30-60 days to get this closed. This is after we have already waited 75 days to get it approved up front and now we are working on 30 days from the actual short sale approval.

The thing to take away from this post is that, many homes being sold under short sale take a significantly longer amount of time than a regular sale or foreclosure sale, and during that time period you will leave yourself open to different types of risk. Some of those risk will be so abstract that even I with 7 years in the mortgage industry and 5 in the real estate industry I had not even considered to be a possibility.