Buying Short Sales in Baltimore County

With northern-county farmland showcasing acres of rustic beauty, and southern communities that hug Baltimore City, Baltimore County is a suburban oasis offering easy access to the conveniences and amenities of a neighboring metropolis.

Maryland’s third largest county (by both land mass and population) ranks as the second-largest employment hub in the state, with 21,000 businesses and a workforce more than 430,000. Some of the largest and most well-known employers in the nation call Baltimore County home, including aerospace specialist Lockheed Martin, health and beauty expert Procter & Gamble, tool manufacturer Black & Decker, as well as the federal headquarters for the U.S. Social Security Administration.

Nestled alongside Baltimore City is the historic town of Catonsville. Founded in the eighteenth century, Catonsville houses a diverse blend of historic buildings, residential charm, commercial and industrial areas, and natural beauty that is unique to the Mid-Atlantic Region.

The center of Catonsville is a historic village with large Victorian homes and a traditional “Main Street” that has been designated as a Historic National Road Scenic Byway. Many restaurants, shops, and offices line the street, and a number of specialty music stores have earned the area the nickname, “Music City Maryland.” For the outdoor enthusiast, Catonsville houses a portion of Patapsco Valley State Park, a woodland area with opportunities for picnicking, hiking, biking and camping.

With the University of Maryland Baltimore County (UMBC), the Community College of Baltimore County Catonsville campus, and several private and public schools, the southwest county region offers educational opportunities at every level, from pre-kindergarten through graduate school and adult continuing education. Residents are well educated, with one in three having a college degree and one in ten having a graduate or professional diploma. About 80% of the area’s children are enrolled in public school.

Baltimore County’s home values have rebounded strongly in many areas of the region, but many affordable options are still available for buyers of every budget. One option to own a home in a desirable neighborhood while sticking to a budget is to consider purchasing a short sale.

A short sale means that the seller’s lender will accept a sale price that is less than what the homeowner owes on their existing mortgage, but it is not often a simple transaction. Just because a home is listed with short sale terms it doesn’t always mean the lender will approve the deal. Anyone shopping for a short sale property should learn the answer to the question, “What should I expect when buying a property that’s the result of a short sale?”

There are a host of issue that can place a long delay on processing a short sale, and many short sales take much longer than 30 days to close. One delay is if the seller has more than one mortgage. The first mortgage lender’s position is protected by the second lender, and a short sale price that results in the second lender taking a significant loss may cause them to reject the offer.

A seller cannot carry out a short sale if they have filed for bankruptcy because a short sale is considered to be a collection activity, and a successfully filed bankruptcy requires all collection activities to stop. Many homeowners are unaware of this, and lenders may not find out about a bankruptcy prior to approving the short sale. So buyers should confirm that a homeowner has not filed for bankruptcy prior to making an offer.

Sometimes a seller will market their home as a short sale without understanding the process involved. Distressed homeowners will often attempt a short sale before having defaulted on their loans. When this happens, the deal is automatically rejected.

A large percentage of short sales are fixer-uppers. If a homeowner does not have the funds to pay the mortgage and keep their home, chances are that they have not been able to afford to maintain it. Both thorough home inspections and total repair estimates should be done before closing on a short sale.

Even after the lender has agreed to it, a short sale must go through a lengthy approval process that can cause it to take months before the buyer is brought to the table to close the deal. Due to this factor, anyone who is looking to close on a new home as soon as possible should think twice before pursuing a short sale.

Buying a short sale is a great possibility for those with the knowledge — and the patience to get the deal done. But knowing all the risks beforehand can help new home buyers avoid a lot of pain and frustration.