Purchasing a short sale:  how it works

 
Buyers like buying short sale homes because they perceive that they will get a great bargain.  Its not as easy as one might think.  First of all, a buyer must understand that a short sale, by definition, means that the bank is agreeing to release its lien for less than the total value of what is owed.  While the seller is signing the purchase contract, the bank must agree to the deal in order for you to get your good price.
 
The biggest issue with buying a short sale is time.  If you decide you want to buy a short sale, anticipate the process to take 6 months to a year to buy your house.  Think about how much rent money you might be paying during this time and if it was truly worth getting a short sale discount on a home.
 
If you are set on buying a short sale because you think the savings outweigh the hassle, the next step is to understand the short sale process as a buyer.  As a buyer, you can short the buying cycle from 12 months to 3 months simply by doing your homework before submitting a contract to purchase.
 
Save time and money!  Minimize the buying cycle to 3 months on a short sale home.  All you have to do is do your due diligence on buying a short sale home.  Follow the questions below and you are on your way to homeownership sooner rather than later.
 
Do you have an experienced short sale agent representing you?  If yes, go to step 2.  If no, keep interviewing agents until you find someone experienced.
Is the seller motivated to sell?  If yes, go to step 3.  If no, find another house.
Does the first mortgage have a reputation for processing short sales in 30 to 60 days, or a reasonable timeframe (no more than 90 days)?  If yes, go to step 4.  If no, find another house.
Is the first mortgage the only lien on the property?  If yes, go to step 5.  If no, ask the agent if the junior liens have already been negotiated.  If the answer is “no,” find another house.
Did you write a contract the followed the lender’s precise instructions?  If yes, go to step 6.  If no, ask your real estate agent to correct any omissions before submitting the paperwork to the short sale listing agent.
Did the house check out in the inspection?  If yes, move forward with buying the home.  If no, ask the bank for a discount to cover the repair costs or consider exiting the contract.
 
The buyer and buyer’s agent have less work to do when buying a short sale than a short sale listing agent has.  The short sale listing agent must submit volumes of paperwork that the bank is asking for.  However, the most important thing to short the buying cycle from 12 months to 3 months is to do the due diligence on your short list of properties up front, so you avoid running into snags that cause delays.
 
Consider hiring a short sale agent who knows has experience in evaluating short sale deals for you so you avoid snags and reach your goal of getting a great deal on a short sale home faster.  Fill out our buyer form and Caroline Allison will call you personally to discuss your buying goals.