Short Sale SellersSteps to Buying Short Sales
Foreclosures are pretty well known but short sales are a new word used by a lot of people buying or selling nowadays. A short sale is when a lender accepts a mortgage payoff less than what is owed on the property.
In short sales, everyone either wins or losses, but is also a mixed bag in sorts for all those involved.
If you’re the seller, the short sale will probably damage your credit, but not as much as a foreclosure.
The buyer will get the property at a reduced price but the deal may or may not take a long time to close (if it closes) and usually the home comes “as is”.
The lender has to take a financial loss but not as large of a loss if they need to foreclose on the property.
Before getting into a short sale, there must be 2 situations to attempt to do a short sale:
- Defaulted Loan – Lenders need to see a default in the loan payment or they will not accept short sale offers or requests for short sales.
- Bankruptcy – If the seller has filed for bankruptcy, forget it. Few lenders will consider a short sale when the seller has filed for bankruptcy.
Why Lender may agree….
More and more lenders are beginning to consider approving short sales since short sales and foreclosures to increased this year. Lenders are very painfully aware that foreclosures are increasingly growing and many borrowers are struggling to stay in their homes. Since foreclosures are an expensive and time-consuming process for a bank or lender, the lender would like to wrap up the mess quickly and with less loss than what is incurred during a foreclosure. Having the short makes the lender look better because the property never gets listed as a foreclosure.
1) Identify short sales
Locate pre-foreclosures in your area via an online database, courthouse listings, legal ads or through a buyer’s agent.
2) View the property
Check on the condition of the property and see if it needs work.
3) Do your research
What do you think the property is worth? Does it have profit potential?
4) Find all liens and mortgages
Ask the seller or the listing agent what are the liens on the property and which lender is the primary lien holder.
5) Figure out the financing
Once an agreement has been reached, the lender may want to close very quickly. Shop for a lender prior to making an offer.
6) Contact the lender
Speak with the loss mitigation department or follow up with the listing agent to make sure they are keeping in contact with the lender to make the process faster and the short sale package has been delivered.