6 Steps to complete a Short Sale Purchase!

A Short Sale is when a seller needs to sell their home for less than what is owed. The bank forgives the amount and allows a new buyer to purchase at or below market value. Many people today think they can just steal the home from the bank and offer ridiculous low ball offers. Time and time again I deal with this same situation from buyers. My simple answer is that the bank is not going to sell the home at a steal, they know what the market value is and determine it for themselves. The bank is not in the business of throwing money away, but if you hire the right agent who has the right tools to negotiate a deal for you then you might end up with that bargain after all!

These are 6 tips for purchasing a Short Sale and still protect your emotions and finances. 

1. Use a Short Sale expert

Interview each Short Sale Agent and ask how many deals they have closed. An experienced Short Sale Agent will be able to help you navigate the long and complex deal. A real estate agent experienced in short sales will be able to know how much they can purchase the home for, advise you on what you should include to make your offer look better to the banks than others and be willing to work together with the listing agent to make sure you are the only offer the bank sees. 

2. Research the Property

Research the property before putting an offer is a major mishap that most people neglect to do. Ask your agent if he can get one of his title friends to look at the liens on the subject property. Make sure that their is only bank liens and not mechanic or creditor liens. These are not paid by the bank and if you want the home you will have to pay for it out of pocket. If you cannot get a free title search than it is worth the cost of $250 to $300 up front, but it can help with your decision.

3. Determine the Fair Market Value

Your agent should be able to figure out what the fair market value is easily. If not run and find a new agent! Once you can figure out the value try and offer 10%-15% under that value. The best way to get a lower price offer is by having your agent ask the listing agent to submit your offer and let the bank counter you. By the time 6 months goes by your offer might be the new market value. Hopefully not and the bank will agree to your price and you end up with instant equity. The bank wants to keep their losses at a minimum but each bank is different and the bank might have bought the loan for 50 cents on the dollar.

4. Avoid Contingencies

If you need to sell your home then get it sold! Don't wait until the bank approves the Short Sale. They want to close the deal as fast as possible. The amazing part is the bank takes months to approve the deal but once they do, they are sticklers for closing fast!

5. Have strong financing

Lenders like to see someone who is going to be able to get their loan and close on time. Remember that they are in the business of giving loans and if you are an FHA offer asking for closing costs and only have enough cash for the down payment you will be considered weak. All cash or 20% will out bid you on every deal.

6. Patience

Patience is the best trait to have during this process. It can take 6 months or longer just to get approval from the bank. Once you are approved is when you open escrow and and all time frames begin. You will close in 30-45 days. Short Sales are complex even from the start. The seller has to put together the Short Sale Package, with the listing and an offer before the bank will even begin. Once the package is in with the lender it can take months before a negotiator will look at the deal. It is long but can be well worth it in the end.

If anyone ever has questions with buying or selling a Short Sale please feel free to ask. Thanks for reading and good luck  to everyone who gets involved with a Short Sale

 

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