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Buying a Short Sale?

By
Real Estate Broker/Owner with Wendy Smith Real Estate

In today's market, in many areas, it can be challenging to find homes for sale that are not either Bank owned or offered as a short sale. 

Short sale transactions have a bad reputation and rightly so.  Who hasn't heard horror stories about short sales that take over a year to close and many never even make it to the closing table.

Buying a short sale doesn’t have to become a nightmare, like anything else, a little due diligence goes a long way.        

       

CDPE - Experience Matters

   When it comes to short sales,  

              an experienced Agent makes the difference 

                            whether you are buying or selling.


 

There are a few questions to ask yourself as a buyer when considering making an offer on a short sale as well as a few questions your agent should ask the listing agent to help you, as a buyer, make a good decision.

Three questions for you as Buyer:

1.      Are you working within a specific time frame?  For instance, is your lease expiring soon?  What are the possibilities your landlord will agree to allow you continue rent on a month-to-month basis should you need it?

2.    Are you prepared to make a fair offer or are you looking for one of those deals as shown on late-night TV?  Despite the late-night TV infomercials, banks are NOT giving away property.  Buyers can usually get a good buy on a short sale but not the deep, deep discounts some people tout.

3.    Can you wait?  During all phases but the final phase (after the approval) progress seems to be at a snails pace, often the only update you will receive is: “the file is being reviewed”.  After the approval finally arrives, the pace quickens to double time and it's all about you the buyer.  

Six questions your Agent should ask the listing agent:

1.    How many lenders?

2.    Who are the lenders?

3.   Has a preliminary title search been done to determine if any other liens or judgments exist?

4.    What is the listing agent’s policy regarding multiple offers?

5.    Is the seller applying for HAFA or any other incentive program?

6.    Who will negotiate the short sale?

Certified HAFA Specialist


Contrary to the guidelines, sellers seeking

HAFA eligibility can increase the short sale

process by as much as 8 to 10 weeks.

 

Buyers Beware: 

There are listing agents who intentionally list properties at prices lower than fair market value as a means to generate activity.  In most cases, the list price is purely speculative – it is not a price the bank has already approved.  Your agent will run a CMA (Comparable Market Analysis) for you and help you submit a reasonable offer.    

Tips: 

  • Request that your agent check public records to see if any legal action (foreclosure, notice of default, etc) has been filed.  Depending on your state, there may or may not be adequate time to process a short sale.
  • Be prepared to tender a Good Faith Deposit, provide proof of funds (if paying cash) or pre-approval letter (if seeking financing).  
  • Include a First Right of Refusal clause in your offer to purchase.
The short sale arena changes frequently, professional Short Sale Specialists must continually keep abreast of the changes and educate themselves of the changes -
        Experience Makes the Difference!



Posted by

Counting Blessings & Serving My Community,

Wendy Smith

 

 

Comments (1)

Jim Costello
Home Mortgage Lenders, Inc. - Tampa, FL
Purchase Refinance Forida Mortgage, FHA Rehab Tampa Homes

Hey Wendy, Great post.  There is definitely a lot to consider when making an offer on a short sale.  With an informed agent like yourself, that helps keep everyone's expectations on the right level.

Jun 21, 2012 03:21 AM