When you’re buying a condo for sale in DTLA, you’ll probably see real estate listings for “short sale” properties – but what are short sales, and should you think about buying one?
What is a Short Sale?
A short sale occurs when a condo owner who’s financially unable to pay his or her mortgage strikes a deal with the original lender to sell the property for less than what’s due on the mortgage.
Let’s say a property owner still owes $350,000 on a condo. He can’t make the payments, so he gets in touch with his lender to ask about selling the unit for less than what he owes – that way, he and the lender both get to avoid foreclosure, which nobody wants.
If the lender agrees, the property becomes a short sale; not because it happens quickly, but because the homeowner is short on the full amount of cash that he owes the lender.
In a short sale, all the proceeds from the sale go to the lender, not the seller.
Buying a Short Sale Condo
Typically, a lender won’t consider a homeowner’s short sale request until someone makes an offer on the condo. The buyer has to prove that he or she has the money to buy if the deal is approved.
Sometimes lenders take several months to approve a short sale, so if you’re in a rush to buy, purchasing a short sale might not be for you. You also need to remember that the seller is doing a short sale because he or she can’t afford the monthly mortgage payments – and that might mean that the seller also owes the HOA and hasn’t been able to maintain things inside the condo, as well, due to financial problems.
The bottom line: Talk to your Realtor® about it before you decide to buy a short sale. There are many properties available that aren’t short sales – and you’re very likely to find your dream home among them.
Are You Buying a Condo in LA?
If you’re thinking about buying a condo in Los Angeles or a nearby community, call us at 213-254-7626 or contact us online.
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