Mastering the Short Sale: Five Pieces of Wisdom to Hear Before You Make an Offer

A short sale can be a great opportunity to purchase a home at a discount, when a lender is selling a property for the remaining mortgage in order to avoid foreclosure. If you’re on the house hunt and come across a house that is selling for far under its estimated value, there is a good chance that it is a short sale. Short sales can be beneficial to both the buyer and the lender selling the property, but this is not something you want to rush into. If a short sale is something you are considering, read on to get the low-down on short sales so you know exactly what you’re getting into before making an offer.

Patience is a Necessity

Buying a home can be a slow process to begin with, but purchasing a short sale home will take even longer. If you are in a rush to move into a new home a short sale might not be the best option. After you come to an agreement with the seller, you will also need to gain approval from their lender/s in order to finalize the deal. If there is only one lender this can take up to two additional months, and if there are two or more lenders it can easily take double that time.

Home Inspection is Critical

Homes sold in a short sale are sold ‘as is’ and the purchaser is provided very little protection, if they are provided any at all. Make sure to accompany the inspector and ask questions about the repairs that need to be done and how much they will cost. Factor those costs into your bid and provide the estimates—it will help the lender see you are not simply giving them a lowball offer.

One Lender is Better than Two

When the property’s seller has loans from two different companies, it means things will get a bit trickier. Not only will it take long for an offer to be accepted, it means there is another party that has the chance to reject the offer. It also greatly reduces the chance of a bargain offer being accepted. If an offer will pay one lender off completely, but leave very little for the second lender, there is a good chance they will reject it. When looking into a short sale find out how many lenders are involved and determine if the house will be worth the hassle if you find out there is more than one.

Have the Right People on Your Side

Working with a newer real estate agent often won’t be an issue purchasing a typical home, but when looking at a short sale you need to make sure you are working with a more experienced team. Having a real estate attorney with experience in short sales can dramatically increase the chances of an offer being accepted. An experienced real estate agent will be able to handle the tighter deadlines and smooth communications with the lender. Buying a short sale is tricky and you need the proper team to guide you along the way.

Have Cash On-hand

Lenders always prefer cash, but prefer it to a much greater extent during a short sale. Even if you don’t have the cash to pay in full, make sure you have all your finances in order. If you need to liquidate assets for a large down payment, make sure to do so before looking into a short sale as you may need it quickly. Many lenders require a payment to be put into an escrow account once the sale is approved to prove that they buyers are fully committed to the purchase.

A short sale can be a terrible headache or a wonderful opportunity to purchase your dream home at a significant discount, depending on the approach you take. By carefully following these tips you ensure that you are ready for a short sale purchase and can submit an offer on your potential new home.

The information for this article was provided by the professionals of Century 21 Manausa and Associates who specialize in Tallahassee short sales.