When Sellers need to sell their home for less than they owe on their mortgage they're shooting for a short Sale. Short Sale homes can sometimes be bargains, but only if you do your homework, stay patient, and remain unemotional during the sometimes lengthy and difficult short sale process.
Here are 6 steps for protecting yourself emotionally and financially when bidding on a short sale.
1. Get Help From a Short Sale Expert.
A real estate agent experienced in short sales can identify which homes are being offered as a short sale, help you determine a purchase price, and advise you on what to include in your offer to make the lender view it favorably. Ask your agents how many buyers they've prospected in a short sale and of those, how many successfully closed the transaction.
2. Build a Team
Ask agents to recommend a real estate attorneys knowledgeable in short sales and title experts. A title officer can do a little title research to identify all the liens attached to a property you're interested in. Because each lien holder must consent to a short sale, a property with multiple liens, like first and second mortgages, mechanics and condominium liens, or homeowners association liens, will be harder to purchase.
A title search may cost up to $250 to $300 up front, but it can help weed out less desirable properties requiring multiple approvals.
3. Know the Home's Market Value
By agreeing to a short sale, lenders are consenting to lose money on the loan they made to the sellers to purchase the home. Their goal is to keep those losses as low as possible. If your offer is dramatically less than the home's fair market value, it may be rejected. Your agent can help you identify the price that's good for you. the lender will determine whether to approval is in it's best interest.
4. Expect Delays
There are two stages to a short sale. First, the sellers must consent to your purchase offer. Then they must submit the offer to their lender, along with documentation to convince the lender to agree to a short sale.
The lender approval process can take a few weeks or months, even longer if the lender counteroffers. Expect big delays if several lien holders are involved; each can make a counteroffer or reject the offer.
5. Firm Up Your Financing
Lenders will weigh your ability to close the transaction. If you're pre-approved for a mortgage, have a large down payment, and can close at any time, they'll consider your offer stronger than that of a buyer whose financing is less secure.
6. Avoid Contingencies
If you must sell your current home before toy can close on the short sale property, or you need to close at a form deadline, your offer may present too many moving parts for a lender to approve it.
Also, consider ordering inspections so you're fully informed about the home. Keep in mind that lenders are unlikely to approve an offer seeking repairs or credits for such work. you'll probably have to purchase the home "as is" which means in its present condition.
Houselogic.com by G.M Filisko.
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