Short Sale SellersBe Prepared When Buying A Short Sale
Before buying a short sale, any excited buyer ready to pick up a real estate short sale should be aware of the complicated or time intensive process required to complete a slow transaction with many players involved.
Be Aware of What You Are Getting Yourself Into
In a short sale, there are a number of parties involved: the seller, the seller’s agent, and the seller’s lender. For that reason alone, the transaction can take between 2 and 6 months to complete compared to a minimum of 30 days for typical home sale. The lender usually will receive a high number of requests for short sale offers and may not respond timely to buyers. Keep in mind that you may need to budget a few months in your home purchase time line.
Get a Professional, The RIGHT Professional
Lenders will often times make realtors take a decrease in their typical commission, so real estate brokers may not look forward to taking these listings. It takes quite a bit of work to successful complete a short sale. Make sure to ask your agent how many short sale he has closed.
Weed out Listings
In most cities, listings will include in the description if the property listing is a short sale. Pass on homes that have more than one lien on it, if possible (your real estate agent can find that out for you). If there are more than one lender involved, then there are more loans to negotiate which can increase the time to complete the deal. You may also want to exclude homes in which a seller has multiple offers, since an offer is already pending the seller’s agent may not submit yours for approval until the first one is rejected.
Get a Good Price
The first step is to have your real estate agent submit an offer to the seller. Don’t expect the current listing price to your initial bid as many seller’s agents will price the home low enough to attract buyers and the bank probably won’t accept a lowball offer. Ask your agent to determine the home’s fair market value by examining and printing out comparables sales in the area. At this point, you will want to make sure that you obtain a pre-approval (not just be pre-qualified) on a home listing.
Protect Yourself
The seller’s agent will submit your offer to the seller’s lender and you will then have to sign a sales contract. Also make sure that your real estate agent specifies that you will not do an appraisal or inspection of the property until the offer has been accepted by the lender, thus saving your money until you have a good idea that you will be getting the house. Most lenders will require that you still put forth an earnest deposit.
Be a Pain
After the offer is submitted to the lender, you may not hear anything for weeks or months. Make sure to call your agent each week or email them to make sure the seller’s agent is contacting the bank’s negotiator frequently to get a status on the purchase. Keep after them until updates are frequently given on the transaction process.
Pay Attention to the Market
When the bank finally sends a counter-offer (which they most likely will do), make sure to see it as a guideline rather than an ultimatum. Many times the lender’s number is based on the its own research. Usually there is a goal to sell the home for at least 90% of the home value. You will have a chance to counter. If the market is sinking rapidly, you could offer less than 5 to 10% less the bank’s counter number.