Buying a short-sale home has advantages and disadvantages, and you must fully recognize each before you begin the process of buying a home in a short-sale.
While short-sale houses typically sell for significantly less than other homes, this process is contingent upon lender approval. Short-sale houses result in a closed deal approximately one in 10 times due to the difficulty of completing this process. If you are interested in buying a short-sale home, speak with your real estate agent first before you submit an offer to the seller of the property.
Your real estate agent must collect pieces of information pertaining to the seller of the property as well as the home itself before you can decide on the purchase price. The more you know about the short-sale home prior to settling on an offer, the easier it may be to close the deal. Follow these essential steps to learn the proper way of buying a home in a short-sale.
One of the first steps you need to take when buying a short-sale home is to research the number of loans recorded for the property. Your real estate agent or a short-sale agent can help you with this process, as he or she can provide insight into whether the lender is going to be difficult to deal with. If there is a substantial amount of money owed on the house, it may be challenging for you to come up with satisfactory offer for the mortgage lender.
Once you gain an understanding of how many mortgages are taken out on the property and the amount still owed, you can work with your real estate agent to determine if the property is worth the hassle. A real estate agent or short-sale agent can advise you on whether the lender may budge on the purchase price or if your efforts are best focused elsewhere. Sometimes a short-sale home sounds good on paper, but the amount owed against the home can be a steep mountain to climb when it comes time to finalize an offer.
When a home has been placed on short-sale, the seller must provide the real estate agent or short-sale agent with a package of personal information to be used in the sale of the property. A short sale seller’s package includes:
Your real estate agent must be able to gain access to this information before you proceed with the sale. In doing so, you are ensuring the sale goes as smoothly as possible. If the seller has not previously provided these documents, the acquisition of these documents can be time-consuming and slow down the sale. The longer it takes for the sale to process, the longer it takes for you to move into your new home. Before proceeding with an offer of interest, be sure your agent has determined the seller’s qualifications to expedite the selling process as much as possible.
Once you have gotten the preliminary steps out of the way, you can arrange a time to speak with your real estate or short-sale agent about buying procedures associated with a shot-sale home. The buying procedures for a short-sale home differ from those used when buying a conventional home. Short-sale agents function differently than real estate agents because they do not need to follow the code of ethics mandated by realtor groups.
Short-sale agents are not required to be realtors and thus can choose to only submit one or two offers if they decide this is the best course of action. A real estate agent is obligated to submit every offered he or she has received, meaning a realtor is easier to work with when finalizing a short-sale home. If you are working directly with a short-sale agent, your offer may not even be presented to the seller, depending upon the person you are working with and his or her attitude toward the process.
Additionally, the offer you submit for a short-sale home must be approved by the bank before the purchase has been made official. This can be a lengthy process, as there is no guaranteed timetable for when the bank begins to view and assess the offers. If you are willing to increase your offer, be sure to state this to your real estate agent in advance. By remaining flexible with your purchase price, you are increasing your chances of being selected by the bank to purchase the house for short-sale. If you are unwilling to adjust your price, you may lose out on the home if the bank receives a higher bid for the property after you have submitted your offer.
The easiest way to buy a home in short-sale is to study the offers already on the table before you calculate how much you want to pay for the property. Your real estate agent or the short-sale agent can provide you with an idea of how much others are willing to pay for the home, and this information can help you make the best offer possible. It is important to remember when you are buying a short-sale home to offer above the competition’s price while remaining below the market price for the home. If your offer is above the market price, you are overspending for the short-sale house. While you want to be mindful of offering above the competition to receive offer approval, you do not want to overspend for the home.
Typically, the first offered received for a shot-sale home tends to be the lowest offer. If you are the second person to submit an offer for the property, be sure to settle on an amount higher than the originally offer. The amount you want to pay for a short-sale home must be both higher than the initial offer and above what others would be willing to pay once they begin to calculate how much they want to spend before submitting their offer to compete against yours.