Most short sales are often stressful, requiring a lot of time and energy. You're not only working with sellers, but you must deal with their mortgage lender. Despite this, a short sale can be the answer to getting your dream home at an affordable price.
Get an Agent
Work with a licensed real estate agent who understands the short sale process. Your agent helps you identify and evaluate properties. Lenders typically won’t allow buyers to represent themselves in a short sale. Through experience, your agent has acquired negotiation tools and familiarity with required forms that assure the sale is completed efficiently and professionally. An experienced agent saves you time and money and helps you understand the detailed process. Contact the National Association of Realtors in your area and request a list of agents who are Short Sale and Foreclosure Resource (SFR)-certified.
Buyers must provide a prequalification letter along with their offer to the short sale lender. The letter confirms that you are preapproved for a loan and ready to close on the deal. Prepare in advance, because once the short sale is approved you typically have only 30 days to close. Ask your agent to make a recommendation, or check with your bank, credit union or local mortgage companies regarding mortgage rates and terms.
Check the Mortgage
Your agent checks public records to see how many mortgages exist on the property. With one mortgage, a property is more likely to get approved. Multiple mortgages complicate the process and take more time. The first mortgage is always paid off, or satisfied, before the second mortgage. If the short sale offer doesn't generate enough revenue to cover all the outstanding mortgages, the lenders will need to determine if there is a way for the short sale to work.
Short sales are not quick transactions. Although a seller has accepted your offer, the bank holds the property title and makes the final decision regarding approval of the terms and conditions. Often it can take weeks or even months of negotiation before coming to a satisfactory agreement. As the buyer, you must be in a position to wait.
Require an Inspection
Buying a short sale property does not mean you must take the property “as-is." You, as a buyer, may be tempted to accept a property without inspection because you're tired of waiting and the lender appears to be holding out. But an inspection reveals potential issues or existing problems that can turn your short sale deal into a disaster. Negotiate with the lender about preexisting damage that may be costly and time-consuming.
- Photodisc/Photodisc/Getty Images
- What Happens When I Sell My Home?
- At What Point in the Selling Process Does the Seller Sign Over the House Title?
- How Does Buying a Short Sale Work?
- What Happens Between Home Loan Underwriting & Closing?
- Can I Owner-Finance My House When There Is a Lien Against It?
- Can You Still Negotiate After an Appraisal?