Purchasing a property in a short sale transaction will require negotiating with the lender (or lenders if there is a first and second mortgage on the home) to accept a payoff less than the balance due on the loan.
- Get pre-approved for a loan with a local lender (the laws are different from state to state). This will ensure the seller & listing agent know you are qualified for the purchase and strengthen your offer in a multiple offer situation.
- Request from the listing agent details on the loan(s). What kind of mortgage do they have (Conventional, VA, FHA, etc.) and how many? Who is the lender(s)? If there is only one loan, your odds increase for a successful purchase.
- Has the lender approved this short sale and what is the situation that caused the hardship? Lenders must qualify the sellers for a short sale.
- Find out what stage the sellers are at in the default process. This is very important.
- Are the sellers considering declaring bankruptcy?
- If you decide to submit an offer, look at recent sales comparables for like-kind properties and the current appreciation/depreciation rate. Partner with a real estate professional to review current market conditions and establish fair market value. Most lenders will want a broker’s price opinion or even an appraisal before your offer is reviewed.
- Be patient! It is a long and cumbersome transaction. Most lenders have not streamlined the process, are inundated with offers and are experiencing very low staffing levels. Remember…it’s a process.
Working with an experienced Short Sale Buyer’s Agent is crucial. Each transaction is unique. The agent will know the questions to ask, what obstacles to anticipate and communicate the expectations to you. The communication between the listing agent and buyer’s agent, in addition to an engaged seller, is the key to your success.