The term "short sale" is enough to make many homebuyers bolt out the door in a panic. But when Jennifer Craft and her husband discovered that the house of their dreams was listed with the often-misunderstood sales tag, they didn't balk.
With a little luck and a lot of perseverance, the Crafts successfully navigated the short sale process and came out the other end with a fabulous new home.
In 2003, Jennifer and her husband purchased a starter home in Knoxville, Tenn. At the time, it was the perfect size for a new family.
But after a few years in the house, the couple was ready for something larger with a bit more character. So on the advice of a friend, they spoke to a Realtor about a spacious listing in a great neighborhood.
"From the quality of the granite countertops to the hardwood flooring, it was exactly what we were looking for," Jennifer says. And for the price, the couple would gain about 1,000 square feet for nearly $40,000 less than similar homes in the area. There was just one catch: The house was listed as a short sale.
A short sale is a home purchase in which the price falls short of what the original owner owes on the mortgage. The lender who issued the mortgage agrees to cut its losses and accept the proceeds from the sale, while the seller avoids the risk of foreclosure and, in some cases, has the outstanding debt forgiven. In an ideal scenario, the lender avoids a lengthy foreclosure process, the seller suffers less damage to his or her credit, and the buyer gets a home at a steep discount.
(Learn more about short sales here.)
The problem with short sales, though, is the uncertainty of the process. It could take several months before the offer goes through, and even after months of waiting, the home could still potentially be foreclosed on, or the owner could come to terms on a mortgage modification. And for repeat homebuyers like the Crafts, there's also an added risk in timing the transaction.
"We actually sold our first home in just 48 hours," says Jennifer. "We were amazed." With only a month until the new owners moved in, Jennifer and her family would have to move out regardless of whether their short sale offer was accepted.
Unwilling to rent for an indefinite amount of time, the family decided to move in with Jennifer's parents.
"You really have to be prepared to wait for an uncertain amount of time, which can be a strain on the family," she says about the temporary arrangement.
Jennifer lived with her husband and toddler son in her parents' house for four long months before getting confirmation that their offer was accepted.
When all was said and done, the Crafts purchased the four-bedroom, 2.5-bath home for $225,000 -- almost $40,000 less than what other homes in the neighborhood sold for.
And while Jennifer is the first to admit that the process is not for everyone, she says she's glad they went through with it.
"Because we were able to wait, now we have a great house in a great neighborhood," she says. "It was really worth all the struggle. We couldn't be happier."
To hear the whole story, watch the video above.
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