What are Boston downtown condo short sales?
The idea of purchasing a Boston condo for sale at a deeply discounted price is appealing to most people, but these situations can come with strings attached. One way to get a deal on a property is to buy a short sale, but the transactions are complex and risky.
Short sales are transactions where a Boston condominium is sold for a lower price than the debt that’s owed. When a homeowner realizes they can’t afford their mortgage anymore, they can start the short sale process with the lender. The Boston property owner has to apply, and the goal is to avoid foreclosure.
Lenders will often approve a short sale if the home is worth less than what’s owed, and the seller has to demonstrate financial hardship. Short sales were incredibly common following the Great Recession in 2008, but have since become less so in downtown Boston.
Boston Condo Short Sale vs. a Foreclosure
Sometimes Boston home buyers think a short sale and a foreclosure are the same, which they’re not. During a foreclosure, the bank repossesses the property. Then, the bank tries to sell it, often at a price well below market value, to cover their costs.
In both situations, financial hardships lead to the loss of the property for the homeowner, but the specifics vary.
In a short sale, the seller is voluntarily entering the process. A foreclosure is not voluntary for the seller.
For the seller, a foreclosure is much more damaging to their credit history, and they may end up having to file bankruptcy.
What Are the Benefits of a Short Sale?
For Boston condo buyers, there are a few big benefits of buying a property in a short sale. The first is the lower price. A lender is very motivated to sell the property and cut their losses. Short sales may be less complex than traditional sales because there is likely to be less competition from other buyers. Your offer has a greater chance of being approved with less competition.
For sellers, the benefits of a short sale include preventing foreclosure and possible debt forgiveness. For a seller who goes through a short sale, they may qualify for a new mortgage after two years. It’s much harder to get another mortgage after a foreclosure.
Are There Downsides of Boston Condo Short Sale?
For buyers, one of the primary downsides of a short sale is that it’s time-consuming. These transactions can take much longer than a traditional transaction. There’s also an increased level of risk for buyers because they’re buying the home as-is.
There’s also the possibility the transaction won’t go through, and the time will be wasted for the buyer.
Since the Boston condo owners in a short sale are experiencing financial hardship, their homes may be in significantly worse condition than similar properties.
For sellers, there are quite a few pitfalls of a short sale too. Sellers don’t have any power to negotiate the price—only the lender can. The seller isn’t going to receive any profits when they sell the home because it’s owed to the lender, and short sales damage the owner’s credit scores.
Boston Condo Short Sale Tips
If you understand the possible risks and still want to look for a property that’s a short sale, make sure that you go into it prepared. While the property is sold as-is, you still need an inspection so you can figure out how much you’ll have to spend in repairs. You’ll also have more negotiating power with the lender if you can prove significant repairs are needed.
Even though short sales are a way to get a deal, you still need to be realistic with your offer. Your offer can be turned down if it’s too low.
It’s also a good idea to provide as much cash as you can because the lender will want to reduce their risk.
Finally, work with a real estate agent experienced in short sales because they’re complex transactions.
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A short sale, or pre-foreclosure sale, is a downtown condo for sale that is being sold for less than what the owner owes on the mortgage. In a short sale, the seller does not have the money to make up this difference, and the bank has agreed to accept less than what is owed. Short sales are different from foreclosures as the owner still has the title to the home and hopes to avoid the credit damage that a foreclosure guarantees.
If you are considering buying a short sale, keep in mind the transaction is very different than buying a regular home. Short sales come with many potential pitfalls for buyers because you are not just negotiating with the seller, the lender must also accept your offer. Here’s what you should keep in mind.
Understand what you are getting into.
A downtown condo short sale takes a long time to close and you may be waiting for months to hear if your offer was even accepted by the bank. If you’re in a rush to move out of your current place, a short sale probably isn’t your best option.
Not all short sales are great deals.
While the Boston downtown condo may be listed at a steal, this does not mean the bank will accept the list price. The property may also have hidden damage. When the seller is in financial trouble, they don’t always keep up on property maintenance or even day-to-day responsibilities.
Work with a real estate agent who has experience with short sales.
Your real estate agent in downtown Boston can help you make sure you aren’t wasting your time by finding out why the seller is attempting a short sale and performing a comparative market analysis.
Don’t skip an inspection.
An inspection is an excellent investment when buying a short sale. Get repair estimates for any problems discovered and consider calling specialized inspectors to check for expensive issues like structural damage or termites.
Make a strong offer.
You are more likely to be accepted by the lender if you have a strong offer. While lenders prefer cash offers on short sales, you can still be approved if you have financing in order, a large down payment, and you are willing to close at any time. A short sale may not be a good choice if you need to sell your current place first or you have other contingencies.
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