These are very good questions that need to be weighed very carefully. The short sale approval process can take months and then still months to close once you have approval. Some banks are improving, but the process can also be slowed down by the Seller not turning in all of their paperwork in a timely manner. This scenario does have its risks and you are very smart to be considering them all and not rushing into anything.
I would discuss this and your concerns at length with your Realtor. If your Realtor does not specialize in short sales, get with his or her Broker to discuss. They are there to help you.
Best of Luck,
Your purchase contract (to insure your position) should include an addendum called Contingencies and Clauses that stipulate your purchase does not go through without coinciding settlements for the sale of your current home. That being said the bank may not even look at your offer, not wanting to entertain that contingency. If you have to sell to buy, this is your best option when considering a Short Sale.
Also, you would have to make an effort to offer your home fore sale, but also include that it is contingent on your purchase of a Short Sale Property. You may not get anyone interested in also waiting for the Short Sale to be approved and go to settlement.
Your best bet is to find a home that will settle in the normal amount of time without a third party decision. That in itself is a feat that some would rather not encounter unless your home is extremely desirable.
(If I was representing the short sale seller, I wouldn't take a contract that was contingent on the seller selling his house after final approval. The approval is only good for a certain amount of time and if there were any complications with your side, the short sale seller could be sunk. Extensions are usually granted, but there is no guarantees.)
If buying without selling is not an option and you move forward, be very careful to protect your deposit and right to void the contract. Once that approval is given and you sign off on the third party approval, you need to perform to the contract and seller can go after the deposit if you go into default.
Overall, get a game plan together with an experienced agent you trust. They will make sure you are covered. Contact me if you would like.
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Long and Foster Realtors
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