Often time a buyer gets discouraged at the time it takes to get back an answer from the lender and moves on. When a short sale does go through it is often at a good price for the buyer. I hope this answers some of your questions.
From a lending standpoint, you will receive the property free of any encumbrances other than the mortgage you take out on the property. You and your lender wll be protected by a Lender & Owner's Title Insurance Policy.
The reason a property is sold throught the Short Sale process is the current owner has displayed to their lender that they are in financial destress and can not continue to own the property. In a large majority of these situation there are missed payments, back property taxes due, and even Tax Liens for past due State and Federal Taxes. The payment of these items is negotiated between the seller, their lender and sometimes the buyer. However the payment of these items is worked out, you will receive the property free and clear at the close of escrow.
Reginal Vice President
All Western Mortgage, Inc.
I say, used to, because lenders have recently switched their tune in a major way. I have found the key is to look for the listings that already have lender short sale approval. I'm currently closing one next week (30 days total) and about to make an offer on another. They are starting to move as both sides of the bank are starting to get on the same page. Meantime, there is no downside as far as existing liens or unpaid expenses go... the bank takes the hit on that stuff.
My experience in this arena has shown that the greatest deterent to an easy transaction is a buyer who is not emotionally equiped to wait out the lien holders response. Every lender has different timelines and mitigators who are experience and have developed positive relationships with the lender loss mitigation department are a great benefit.
Lenders typically will advise a seller that to qualify for the short sale negotiation process they must have missed at least one payment. Would love to see that change as we don't understand the need to push oneself into a negative credit situation to first meet that criteria.
In Washington State the seller is required only to disclose whether they are within 20 days of a foreclosure sale date. However, any saavy consumer should be able to access online information through the county or various other resources that are all public.
Ultimately, if your short sale purchase is managed to completion it won't matter to you as the buyer what payments or arrearages exist as lender is being asked to forgive the unpaid remainder of the mortgage and any closing costs, late fees, penalties, etc.
Hope that helps. Susan
Short Sale Listing Specialist
During the escrow period, the escrow company will do a title search and identify any delinquencies including mortgage payments, taxes, HOA dues, etc.
As a buyer you are entitled to free and clear title (i.e. free from any liens). Any delinquencies and liens are paid through escrow by the seller to ensure you free and clear title prior to the deed recording in your name.
The agent you choose to work with during your purchase process can assure these items are taken care of and you enjoy a smooth transaction with no surprises :-)
The Cooper Dodge Group
Urban Real Estate Services
620 1st Avenue
San Diego, CA 92101