There is less competition in the short sale market.
With the deadline fast approaching (Nov.30th) to take advantage of the Federal Tax Credit, first time home buyers are not paying attention to the short sale market. This creates a great opportunity to make a deal for those who are not pressured to buy.
The short sale market was booming with multiple offers in on many properties earlier in the year. This is because, although Banks will not give them away, you do tend to lower than market value sale price. The fact that they can take 3+ months to get done has taken many of the first timers out of this target market.
Short sale properties generally are in better condition than the bank owned properties, because the sellers are still living in them and understand that they need to keep them up in order to get a deal done and save their credit.
You can never be assured that a Bank/Investor will approve a short sale, but if you do your homework and make a reasonable offer, your odds will increase. Here are a few other tips for buyers looking to have a short sale transaction.
Being aware of the elements that make a short sale transaction go smoother can help you determine which properties have a better chance of not only closing, but getting done quicker than others. Here are two terms to look for.
- Approved Short Sale: Most Banks won't even look at the file until there is an offer in on the property. Normally and approved short sale means that there was an offer in that the Bank/Investor approved and for some reason the Buyer backed out. It means that if you offer full price you will not have to go through the months of approval. If you try to go in lower than the approved sale price the process can start all over.
- Professional Negotiator Hired: This means that the Seller has hired a third party negotiator to work with the Listing Agent and the Bank on getting the process completed more efficently. This can be an Attorney that specializes in this field or there are many companies that have the staff and systems in place to help get an accepted offer approved.
Get your offer accepted, have the home inspection, and sign the purchase and sales agreement as if it were a normal transaction: "Why would I pay for an inspection before the bank approves the sale?"-- For a couple of reasons. First of all, Why would you want to be off of the market for 3+ months and then find out their is deal breaking problem with the property? Secondarily, once the Bank approves the final HUD1 Statement it can not be changed at all! By addressing any inspection concerns prior to this stage, price reductions for necessary work still have a chance of being approved. It will be an easier decision for the Bank/Investor to make a decision knowing that the inspection is done and will not effect the outcome of the transaction.
Get a buyer's agent familiar with short sale transactions: In Massachusetts, we have a Contract to Purchase prior to the P&S. Using the proper language and addendums with these contracts will protect your interests in the event that the approval is not attained. Having access to the most recent sold comps will help you make a ligitimate offer that has a better chance of being approved than a low ball offer.
If the Tax Credit gets an extension or once the deadline has passed, these will again become the focus of many first timers looking to get more for their money. Now is the time to make your best deal without having to compete in a multiple offer situation.
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