Falmouth MA Short Sales - Pre-foreclosure Purchase
As a home buyer looking for value in the purchase of real estate you may consider a Falmouth MA short sale as a viable option. Buying a short sale is a difficult and often a frustrating process and should not be confused with a foreclosure. To have success, hire experienced professionals that understand all aspects of the transaction. Utilize the services of Realtors, attorneys, accountants, mortgage lenders and home inspectors as they all provide expert advice.
A Falmouth Short Sale Defined
Homeowners that have financial hardships may pursue a short sale prior to foreclosure. The property value is less than the outstanding liens on the property (mortgages and insurance premiums) and the homeowner does not have sufficient resources to pay the difference. Negotiating a short sale may be a preferable option to preserve their credit and limit their debt exposure. If approved by the lender(s) they are willing to accept less than what is owed to them.
Massachusetts law often presents the lender with incentives to offer the homeowner other alternatives. The foreclosure process takes time and money and may prove to be more costly to the lender. Under the Home Affordable Foreclosure Alternative (HAFA) offered in 2010 by the Treasury Department, lenders and homeowners have additional incentives to consider a short sale. Buyers also benefit as the Falmouth MA short sale listing may have been pre-approved and will allow for a more typical negotiation and transaction.
The first step to a successful Falmouth MA short sale transaction requires the negotiation of an acceptable contract with the Seller subject to lender approval with no guarantees that your offer will be approved. If the contract is not approved by the lender then the Seller may not have sufficient time to sell to another party and avoid foreclosure. The following tips will increase your chances of negotiating a successful Massachusetts short sale transaction:
You Must be Credit Approved
As a home buyer you must provide evidence that you qualify to purchase the property. The Seller is not likely to accept your offer without a valid credit approval as the lender will not grant approval. Get pre-approved from a reputable lender or if a cash buyer provide proof of funds. The approval must not contain conditions such as selling an existing property as this is an issue for the lender.
Finding Falmouth Listings That Qualify
Homeowners in financial distress typically have a limited amount of time to find a qualified buyer. If they have not connected with their lender(s) and started the process, there may not be sufficient time to affect a sale. Consider all Falmouth MA real estate listings and surrounding communities. As your real estate agent, I can identify properties that you may consider. Information I will obtain includes:
- Is the seller's short sale package prepared for submission to the lender?
- Does the property have multiple liens? If more than one, what are they?
- Is there a plan to obtain releases from all the lien-holders?
If you pursue a property that is not "short sale ready" you may be restricted from buying other properties of interest. A Falmouth MA short sale may not be your best option so consider all listing availabe at Falmouth homes for sale.
Offer and Acceptance by the Seller
The first step is to negotiate a contract with the Seller and you will be competing against other buyers. Some real estate agents market the property substantially below market value to entice buyers. Others price the property at the bottom of fair market value. Price, terms and your qualifications will be the deciding factors for Seller acceptance. Sellers and lenders prefer offers with fewer contingencies.
- Your Deposit - Sellers will not be likely to accept your offer with a low deposit. A buyer that has little to lose can easily pursue another property and "walk away". To demonstrate good faith offer the Seller a strong deposit.
- Home Inspection - It is customary to conduct the home inspection prior to submitting to the lender. A seller can't take the risk of allowing the inspection after lender approval. The buyer can easily "walk" from the home inspection and lenders normally will not approve them.
- Flexible Closing Date - Lenders often approve short sales with quick closings. You must be prepared to comply if you want to consummate the sale.
- Subsequent Offers -As a rule, real estate agents must present all offers. A contract with a higher sales price may have a better chance of being approved by the lender. The lender will give the Seller direction as to submitting additional offers and in most cases they will be treated as back-up offers. In addition, arrange for your lender to lock your interest rate for your mortgage so that you qualify whenever the closing is required.
Lenders have no set formula for determining the value of the property other than to substantiate values through due diligence. However, Freddie Mac (one of the largest secondary market lenders) has a value range of 88% of one or more broker price opinions (BOP). Have realistic expectations of the time-frame for approval as it may take between 30-180 days and property values can change.
If the lender and the Seller are participating in the HAFA program, these timelines will be streamlined for a quicker response. Once the homeowner has started the process, the documents for lender approval may have already been reviewed and a projected selling price established.
If you are interested in pursuing a Falmouth MA short sale or other listings currently on the market, please contact me at Laurie Bailey-Gates Realtor for more information or call 800-856-2479.