Buying a Short Sale Home: Tips to Make the Process Flow Seamlessly
Buying a home on a short sale can be an exciting and unsettling time for you and your family. You want to get a good deal on the house, but that’s not always possible. At the same time, you need to be aware of the seller’s special needs and restrictions placed on him by the bank. Here’s how to make sure your next short sale goes off without a hitch.
Make Sure You’re Getting a Good Price
Getting a good deal in this market is a lot harder than it used to be. Start with 10 percent below the fair market value and work from there.
Work With a Good Agent
A Union Short Sales Specialist can help you decide how to put together a reasonable offer on a house. He or she can also help you find good prospects that would be worth your time. Not all short sales are worth considering. Some homes are in such dire need of repair that no offer would be worth the trouble. Those homeowners are in a tough position, for sure, but that’s not your problem. Your problem is finding a house you like and can move into without a lot of hassle.
The Seller’s Qualifications
The seller needs to convince the bank that the short sale is worth the effort. Many times, a bank won’t enter into a short sale because the buyer has too many assets, has a high enough cash flow that it’s not worth it for the bank to lose money on the deal, or the homeowner has cash in the bank or a life insurance policy that can be used.
On top of this, sellers might place their home up for sale without actually having the bank’s approval for a short sale. If it’s a “for sale by owner,” tread lightly – especially if they mention that they’re trying to sell short or that they’re looking to get out from under the mortgage. They may not have approval from their bank, and you may be setting yourself up for a battle between you and the seller’s bank.
Make The Offer
Making an offer is hard. There are many stories out there of people who have gone through the process and have confirmed it can be a nightmare for the seller and buyer. Buyers sometimes low-ball the seller hoping the score a good deal. The reality is that banks won’t accept low-ball offers, and that’s what you’re dealing with behind the seller – the bank.
The bank has an equitable interest in the property, wants as much money as it can possibly get, and won’t be bullied into a low-ball offer. So, price your offer attractively. You don’t have to offer full price, but you should be somewhere in the neighborhood.
You probably won’t complete the closing for about 6 months. Short sales are a long, drawn-out, process. Mentally prepare yourself.
Don’t Demand Too Much
Sometimes, the seller is under a lot of pressure, and can’t accommodate a lot of conditions. You have to realize that short sales happen for a reason – the homeowner is short on funds. And, the bank also has a stake in this game. It’s trying to sell the house for enough money to recoup its losses.
You may not be able to get concessions for a new roof, for example, or a replacement back door. You have to be willing to accept this when you go into these deals.
Lisa Anders has been involved with helping people buy and sell real estate for quite some time now. When she has the time, she likes to sit down and share her knowledge on the industry by posting online. You can read her enlightening posts on various websites like real estate and finance blogs.