You may be living under a rock if you have not heard that “right now” is the most optimal time to buy real estate. If you have heard this, you probably are familiar with terminology like short-sale, foreclosure, REO and traditional sale homes; but do you fully comprehend the idiosyncrasies of these types of transactions and structure of how the deal must be handled?
The biggest complaint I get is around the structure of a Short-Sale transaction. The complaints include the time it takes to reconcile and solidify a contract, now knowing exactly what type of offer to make, or for how much to list the property, and lack of communication with the bank. There are many things that both the seller and potential buyer must know before they get involved with this multifaceted transaction. I am going to provide you with some excellent tips on being able to effectively navigate through a short-sale.
<!--[if !supportLists]-->1. <!--[endif]-->The first thing you need to do is find a Real Estate Agent that is educated, trained and experienced in Short Sale transactions on both the seller and buyer sides. The National Association of Realtors has a designation called Short Sale and Foreclosure Resource that requires specific training around these types of transactions.
<!--[if !supportLists]-->2. <!--[endif]-->When structuring an offer for a short-sale understand that the property has already been discounted due to depreciation of that asset, and the bank is looking to obtain a price slightly below fair market value because they are going to be taking less than the pay off amount of the mortgage. If you are serious about purchasing a property that is short-sale your price needs to be realistic because the property will go through a Broker Price Opinion (BPO) and if your offer is substantially less, you probably will not obtain that property.
<!--[if !supportLists]-->3. <!--[endif]-->If you are looking to purchase a short-sale or foreclosure property understand some of the legal rights you have, and ask your agent to describe the structure and anatomy of the transaction. You will have a right to inspection, but banks typically will not accept any contingencies. Did you know that a bank can provide an addendum halfway through the transaction that will change the dynamics? These are questions that should be clarified prior to seeing your first property by your agent.
<!--[if !supportLists]-->4. <!--[endif]-->The structure of the offer represents the strength of the offer. This means that a cash offer of full price and 30 day close may appear stronger than a 10% down and financing with a 60 day close that is also full price. A trained agent will understand how a contact needs to be structured in order to have a higher probability of being accepted. It does the buyer no good to wait for an answer from the bank while other viable properties are being bought all around them if the structure of the offer will not be accepted. The key to today’s real estate market is leveraging time, like the old saying goes, time is money.
It is not hard to find great value in the current real estate market, but it is also easy to lose deals left and right. If you have questions about short sales or foreclosures, please contact our office for a free booklet on buying distressed properties.
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