Short Sales- any advice? To do or not to do?

[Theresa Mack]

Any advice on short sales? I am a new investor. Properties are going so fast on the market this past year and now current year. I found a short sale that is offering a USDA loan. What is everyones thoughts on Short Sales as well as Usda loans? If i go through with the purchase, any advice on the process. I hear it can be long and grueling. Thanks in advance!

[Charlie MacPherson]

@Theresa Mack Short sales and USDA loans are two completely separate topics.

Eligibility for USDA lending hinges on location, condition and price.  Search "USDA Eligibility Map" to see if your location is eligible.  The property must pass the appraisal for both value and condition and the condition requirements are strict.

Short sales are slow and difficult.  Unless the price is listed as "approved", you have no idea what the final sales price will be.  "Approved" means that the lender has agreed to that price, which is less than is owed.  There may be other loans and liens to deal with as well.

The last short sale I did took 9 months.  The closing date was pushed back 5 times and at the last minute, the 2nd lien holder decided that they wanted an additional $5,500, which had to be paid in cash.  If it was part of the new mortgage, the 1st lien holder would just take it as they were still being paid less than was owed.

Short sales are usually not the right answer for an owner occupied house due to the uncertainties in cost and closing dates.  If you're buying it as an investment it can work - but don't forget that USDA single family home loans are for owner-occupied properties only.