Question: Friends have told me that there are come great deals to be had right now in homes offered as a short sale. What is a short sale? Should we be wary of one?

Answer: In a short sale, a buyer pays less than the amount the seller owes the Lender. There are more cases of 'Short Selling' in markets where home values are dropping. Typically, when a homeowner can't pay his mortgage because he has suffered some sort of hardship- loss of a job, or divorce for example; he simply sells his home. But when home values are dropping, this can be a problem.

In some cases, a homeowner might find he owes more on his mortgage than his home will sell for. In these cases, lenders will sometimes accept less than the amount owed on the home, assuming the homeowner doesn't have other assets that can be sold to make up the difference. The lender then doesn't have to go to the expense of selling the house at auction.

The question you have to ask yourself is: Are you really getting a great deal?

If the house was purchased at the peak of rising home values, then the homeowner might have paid a premium price for the property. If values are dropping today, the Lender may only be able to discount the property to current market values. So in that case, you wouldn't really be getting a bargain at all. You'll have to know what similar houses in the market are selling for to find out if your are getting a good deal. Find out how long the home has been on the market and make sure you get good inspections.

It is very important for to pursue home inspections, as most Short Sales are listed "as is".

You will also need an experienced Mortgage Broker on your side. Give our Team at Gold Standard Consulting a call for your entire home financing needs!

 Lyn Graham
Branch Manager
Gold Standard Consulting
888-507-5770