RISMedia.com recently ran an article explaining how buyers can profit from the "year of the short sale" or find a great property among the plethora of distressed homes on the market. Here are some excerpts.
1. Filter your Search. When you sign up to receive MLS listings, filter for these terms: Subject to bank approval - Pre-foreclosure - Notice of Default - Give the bank time to respond - Preapproved by bank - Headed for auction
2. Choose the right Realtor. Find one (me) who is experienced and trained in dealing with short sales (and/or bank-owned properties). Successfully making an offer and closing on one of these distressed properties has its own challenges.
3. Don't rush the investigation. Make sure your Realtor (me) has researched the liens and encumbrances on the property, and thoroughly explained them to you. Uncover how much the mortgage is worth. Find out how much the current owners paid and when. Find out how many liens are on the property. Find out which lender is the primary lien holder. Research comparable sales in the area. Remember, your Realtor has access to all this information. You don't want to rely on an online site where owners input their own information.
4. Pay for a good home inspection. This is worth every penny and the best insurance you will ever buy for that home. Short sales are typically sold "as is," with no contingencies allowed. That short sale is no bargain if you discover-after the closing-that it requires major, unexpected repairs. A thorough home inspection will provide a clear view of the home's condition, allowing you to make educated decisions on whether or not to purchase.
5. Your Realtor (me) will help you through the process of making an offer and negotiating the terms. Your role is to know what you can afford (you need a preapproval before you make the offer), and to be patient. Short sales are overloading some lenders. Be aware that processing and decision-making times can be quite long-up to a year or more. Realize you can continue to look at other homes while you wait for an answer.
Short Sales offer a good choice in today's market for a buyer, and certainly there are many sellers who need to use that method to get out from under their mortgage. Start by finding an experienced Realtor in Mercer County (me) who has represented buyers in short sale situations. Call or email me to discuss the process and how you can get started.
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