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Tips for Buying a Short Sale

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Real Estate Broker/Owner with *ROCK REALTY|Broker|Realtor|Real Estate|WI Short Sale Agent* 55387-090

Buying a Wisconsin Short Sale


Tips for Buying Your First Short Sale

A short sale is a fairly simple procedure, at least in theory. A homeowner sells their home for a price below the current mortgage balance. The bank agrees to take this lesser amount as payment in full of the mortgage in order to avoid the heavy cost of a foreclosure. Here are some tips for buying your first short sale.

Short Sale prices are determined by the Market

Banks determine which offers to accept by reviewing the current market conditions. They will look at the prices of homes that have recently sold in the nearby area. This information will provide the lender with solid data for the average price of a home in that vicinity. How low will they go? This depends on how quickly they would like to sell the home. If they determine that they would prefer to sell the home now, and not proceed to foreclosure, they may agree to sell the home at below market value.

Ask your Realtor® for their Price Opinion

Before you submit a low-ball offer to the seller, ask your Realtor® for their price opinion. This is a good way for a prospective buyer to find an appropriate price range for an offer. Your agent can look at recently sold comparable homes and give an opinion on what they feel the home should sell for. This is similar to a Comparative Market Analysis, or CMA.

Multiple Mortgages Can Cause Problems

When a home has a 1st mortgage and 2nd mortgage that are held by separate lenders then a short sale could take a very long time, if it gets approved at all. Unfortunately, this type of scenario is out of the hands of the real estate agent and the seller. Whether or not the two lenders agree to the short sale offer is totally up to them.

Approved Prices are Usually Processed Faster

If a lender has already determined a price that they will accept, this can speed up the process. Usually, this is an indication that the seller has been in contact with the bank to discuss the possibility of selling the home. If an offer within that price range is submitted to the bank, the short sale is far more likely to be approved quickly.

Prepare for the Bank to say No

While short sales can help buyers get a home at a discounted price, the process can stretch out over time. The sale can get turned down by the bank for a number of reasons. This is why people looking to buy a short sale should be prepared to move on to a different property in the event that the bank denies the short sale. Keep an eye open at available homes during the short sale process. If the bank does say no, you will then have a list of potential houses that may also be an option.

While a short sale transaction may span a few months, it is a good way to buy a home at a friendly price. Talking to an experienced Realtor® about the available short sales in your area could put you in line to get a good home at a great price.

Buying a Short Sale - Original Post

Comments (4)

Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

Multiple mortgages can cause problems--unless you used a skilled short sale agent (like you).

Nov 03, 2011 08:02 AM
Michael Collins
*ROCK REALTY|Broker|Realtor|Real Estate|WI Short Sale Agent* - Janesville, WI
CDPE, SFR , Wisconsin Short Sale Specialist Realto

You're right Melissa, I HAVE had to navigate quite a few multiple loan short sales.

It's important to note, that depending on the situation a property with multiple mortgages can often be sold at an even lower price then those only having one mortgage. Each situation is unique though.

Thanks for dropping by!

Nov 03, 2011 08:45 AM
Gabrielle Kamahele Rhind
KGC Properties LLC, Tucson Property Management & Real Estate - Tucson, AZ
Broker/Owner

HI MICHAEL!  Good tips - I try to avoid short sales because of the low rate of success with them.  However, I let buyers always know the "biggie" about short sales - prepare for the answer being no.  I heard only 20% of short sales close - knowing this makes it easier for Buyers to move on!

Nov 03, 2011 11:08 AM
Michael Collins
*ROCK REALTY|Broker|Realtor|Real Estate|WI Short Sale Agent* - Janesville, WI
CDPE, SFR , Wisconsin Short Sale Specialist Realto

Hi Gabrielle. Thanks for dropping by. I've actually had a very high success rate on my short sale listings. Banks have really become a lot easier to deal with and I've been able to help out many struggling home owners as a result.

Nov 04, 2011 02:15 AM