According to a recent article from Rismedia.com, 2010 is the “Year of the Short Sale”. A short sale is a listing where the lender agrees to take less for the home than what is owed on the mortgage, and many times the buyer can get the property below market value, sometimes way below market value. Here is how to go about successfully buying a short sale:
1. Search for short sale properties
Most short sales are listed by real estate agents. You will find these listings on local websites and in MLS feeds and from Number 2.
2. Select a real estate professional
Professionals with short sale experience can help you navigate the short sales process in your local market. The buying process is often far more complex—and far longer than typical sales–so a trained ally on your side can make your experience successful, plus we have access to all short sale listings.
3. Investigate the mortgage and liens on the property
Here’s where a good short sale real estate agent is worth his or her weight in gold. Uncover how much the mortgage is worth. Find out how much the current owners paid and when. Find out how many liens are on the property. Find out which lender is the primary lien holder. Research comparable sales in the area. Your REALTOR can provide all of this for you.
4. Have a home inspection
Short sales are typically sold “as is,” with no contingencies allowed. That short sale is no bargain if you discover—after the closing—that it requires major, unexpected repairs. A thorough home inspection will provide a clear view of the home’s condition, allowing you to make educated decisions on whether or not to purchase.
5. Write a complete offer
Remember, the lender—not the owner selling the property—is calling the shots and decides whether your offer will be accepted, rejected or countered. Helping the lender, whose agents may be overloaded with a glut of short sales, fully understand the financial picture will support your bid. There is a lot of material that will be included in your short sale offer. Your REALTOR will guide you through the process.
6. Negotiate
Like any real estate transaction, successful negotiation is required to strike a deal. If the lender rejects or counters your written offer, you’ll have to negotiate with the lender by making a higher offer. Your REALTOR will help you, but be prepared to offer more money to close the deal, or to walk away if it doesn’t make financial sense.
7. Be Patient
Short sales, which have increased in volume and frequency, are overloading some lenders. Be aware that processing and decision-making times for some lenders can be quite long—up to a year or more. Decide if you have flexibility in your timing, and if so, know that you may be waiting for awhile.
thx,
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