Short Sales- Pursue or Run?

One of the questions I am most often asked is about the short sale process and whether  my buyer clients should pursue them .  Short sales continue to possess a very negative connotation but they remain very opportunistic.  Here are a few points to consider when consider a short sale:

·         Can you wait the 3-6 months for lender(s) approval?  What will happen if you’re at square one if the deal doesn’t go through?  

·         Is the seller motivated or just trying to delay the foreclosure to have a place to live for free? An unmotivated seller will spell doom for any transaction.

·          Is the seller contemplating a bankruptcy? A bankruptcy filing is also a death nail for a transaction.

·         Is the listing agent experienced and/or knowledgeable about short sale process? Don’t be fooled by a CDPE or other certification (Certified Distressed Property Expert). This certification does not mean the agent has ever closed a single short sale.

·         Is your buyer’s agent committed to the transaction? Many agents don’t want to deal with short sales because of the uncertainty?

·         Who’s negotiating the sale with the lender(s)? The agent or third party?

·         Is the property an investment property or primary resident of the seller? Banks are generally more lenient on a primary residence.

·         Does the seller have any funds to contribute towards any outstanding HOA/Condo fees?

·         Has a title search been completed? You don’t want to find out after the lender approves the terms of your offer that there’s another outstanding lien (tax,mechanic,judgement).

·         Will the seller maintain the property during the process or will the property be deteriorating?

 Don’t be scared off of a short sale. They do take time and aren’t right for every buyer. If you’re up against a hard deadline to be in a place, buy a foreclosure or a regular resale. If you can find a motivated seller that has equity, you can occasionally get even a better deal. If you’re renting, buying as an investment or otherwise have the flexibility, go for it.