Hilton Head Island Short Sale Real Estate

View All Hilton Head Island Short Sales

I am sure by now that many of you have heard of the term “short sale”. It is being used widely throughout the real estate industry and is popping up everywhere in the Hilton Head Island real estate market. In fact, “short sale transactions” are dominating many real estate markets throughout the US. By definition, a short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the current debtor. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrower.

Short sales are very popular with investors because they represent an opportunity to buy a property for less than the market value. However, if you have been monitoring the Hilton Head real estate market and are considering purchasing a “short sale” property, here are a few things that you need to be aware of.

Even though all transactions are negotiated between the purchaser and the seller, at the end of the day the lender has the final say. And, depending on which lender holds the note, their response time on the negotiated transaction can take months to come to fruition. In some cases, as many as six months to close. Much of the time delays are due to the sheer number of “short sale” transactions these lenders are receiving on a daily basis. It is sort of, hurry up and wait, so patience is a virtue when dealing with these “short sales”.

Due to the a sellers financial condition a buyer may need to be prepared to come to closing expecting to pay additional expenses. These expenses may be the result of back P.O.A (Property Owner Association) fee’s, back liens, termite inspections, customary repairs that is usually the responsibility of the seller, etc. Also, the appraisal could cause another problem. If the property is in a declining area and the deal drags on while the values in that area continue to decline the value of the home may drop below your offer to purchase which would then be reflected in the appraisal. Most lenders are admit about sticking to the original offer, so the buyer would have two choices; (1) take the property at above current market value, or, (2) walk away from the deal. The downside to walking away is that this would typically come late into the process and after the purchaser has had their earnest monies tied up for some time. Also, the purchase would have incurred expenses such as home inspections, attorney’s fees, title search, etc. So, this is certainly something that you will need to be aware of.

A bank owned (R.E.O) property is another term that has popped up in almost all area real estate markets. The term “bank owned” most often refers to homes that have been repossessed by the foreclosure process and did not sell to another party at the foreclosure auction. Bank owned homes are often called REO homes which stand for "Real Estate Owned". They can be just as attractive as a short sale and purchased below market value, but, without the delays or the risk of additional expenses. The bank will clear any defects in the title before putting it on the market for sale. When you make an offer on a bank owned property, you will most likely get a response from the bank within a week if the offer has been accepted and typically will close on the property within 30 days. However, the condition of a bank owned property can be an issue because they are sitting vacant. A short sale property is usually in better condition because in most cases, it is still owner occupied during the transaction process.