WANT TO BUY A SHORT SALE? WHAT YOU NEED TO KNOW.
We may be 6+ years into the housing downturn here in CT and short sales shouldnt be a mystery to anyone anymore...however I am still shocked at just how many buyer's agents attempt to represent clients through these transactions without the slightest clue of how short sales work. This along with inexperienced listing agents on the other side of the short sale are likely the #1 reason so many short sales fail. Time and time again I see short sales fail simply due to agent mishandling. Sellers need to take care in selecting the agent to list their short sale.
But today Im talking about buyers. As a buyer you also need to make sure your agent is experienced in short sales - or prepare for a bumpy ride and a slim chance of seeing a closing. There are a few common points of confusion I frequently see when buyers agents have not properly prepared their client for the short sale (usually because they just don't know) so here are...
THINGS YOU NEED TO KNOW AS A BUYER INTERESTED IN SHORT SALES:
Short sales take time! No matter what the contract says or how many threats you lay out or just how good your offer is, the seller's lender will process the short sale in their own sweet time, with no concern for your wishes. There is nothing you can do to change the timeframe on the short sale. Acceptance is the only policy. Be prepared to wait at least 60-90 days for a short sale approval - sometimes longer. If you can't handle that kind of uncertainty - a short sale may not be for you.
Short sellers have different motivations from "regular sellers". Understand the sellers motivation. Especially when involved in a multiple offer situation. It's not always about the money!
There will be limits on seller concessions. Most investors will tap concessions at 3%. Some won't allow any at all. If you need 6% cash back to make your loan work...this is not likely to happen with a short sale.
You are buying the home as-is. Don't expect the lender to renegotiate your approval over an inspection report. Also - the seller may or may not make repairs for you, but don't hold your breath - especially on big ticket items. The best time to find out about serious defects is BEFORE the short sale approval and offer accordingly. Lenders will also NEVER make repairs on short sales. NEVER. They don't own the home so even if they wanted to, they can't.
You will need to move quickly once you have the short sale approval. Most approval letters expire in 30-45 days.
SELECT THE RIGHT AGENT! Not all real estate agents understand short sales. The best odds of you getting to close on your new home is when both agents are well versed in short sales. As a buyer - you need an experienced buyers agent with plenty of short sale experience for the best odds of success.