Home Buying in 11221>Question Details

Rumahtinggal, Home Buyer in Jersey City, NJ

Is it better to inspect a Short Sale house before submitting an offer?

Asked by Rumahtinggal, Jersey City, NJ Mon Jul 4, 2011

Since I thought that once I submit an offer and put down earnest money, when the bank approves then I have to complete the purchase or loose the earnest money. While the earnest money also detrimental for the approval from banks.
Any tips on how to purchase short sale in a shorter period of time?

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Answers

12
Dear Rumahtingal:

If you are purchasing in Brooklyn, typically you would do an inspection before you go to contract, but after your offer is accepted by the seller. A short sale is not a bank owned property/foreclosure. It is still owned by the actual homeowner. They call is a short sale because the proceeds the seller gets at the closing is not enough to pay off their existing mortgage. Based on that fact, the seller has to ask the banks permission to accept the deal and consider the loan paid in full at the closing even though the funds are less than what is owed.

The process to get to contract is the same, you make an offer, the owner accepts the offer. The seller's attorney send your attorney a contract, you sign the contract and give your down payment check to your attorney (who intern sends it back to the seller's attorney). At that point you are bound by the contract. Hence, if you want and/or need top do an inspection, you would do so prior to signing the contract. If al goes well with the inspection, then you sign the contract. If all does not go well with the inspection, you may not want to buy the house and then you would not sign the contract of course.

After you are in contract you cannot back out of the contract. Make sure everything is okay with the assistance of your attorney. If you do not have an attorney get one. By the way, the thing about a short sale is that typically they are subject to "bank approval" after you go to contract (that's the bank that holds the homeowner's mortgage). If the bank denies the short sale the deal falls apart and you the buyer gets back your down payment and have to find another home to purchase. This is the risk to the buyer that is inherent with short sales (unless they are pre-approved short sales, call me and I can tell you more about that).

Often times the purchaser's attorney will request that the buyer have the right to back out of the deal if it takes too long to get the short sale approval. You would discuss that with your attorney. If I can be of further assistance, please contact me. Good luck & Happy 4th of July!

Sincerely,
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
Email: MitchellSFeldman@aol.com
1 vote Thank Flag Link Mon Jul 4, 2011
Your contract is most likely written that once approved you have a certain amount of time to perform inspections. You might never get to that point so save your time and money and wait until you have WRITTEN bank approval in hand.
0 votes Thank Flag Link Fri May 29, 2015
No, despite some agent's repetitious answers below, you should not waste any money to do inspections before your offer is accepted. If your agent knows how to structure your purchase, you should have plenty of time to do inspections after approval and before the release of contingencies.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Sun Aug 19, 2012
Hello,

If you are serious about buying this house, have it inspected before you lock into a contract, just to make sure you didn't just contract a can of worms.

As for submitting an offer, talk to your Realtor, have them do a CMA on the property and put in an offer 20% below the CMA estimate. Bank don't want to hold on to inventory, they rather get rid of the properties they have. As long as your offer is reasonable, and you targeted the right price with your Realtor (Which comes at no cost to the buyer) you should have no problem.

Hello Izzy!

There's a beautiful 3 Family Brownstone on Decatur St. It's a little bit higher than your price range, but not by much. If you are really looking for an investment, the fastest moving area in Brooklyn right now is Crown Heights. They are rapidly doing alot of business construction and alot of the trendy crown are staking their claims...

Give me a call anytime.

Luke Constantino
Commercial | Residential
REMAX PARK SLOPE
Direct: (212) 300-3919
Lukeconstantino@remax.net
http://LukeConstantino.com
0 votes Thank Flag Link Sun Aug 19, 2012
Hello,

If you are serious about buying this house, have it inspected before you lock into a contract, just to make sure you didn't just contract a can of worms.

As for submitting an offer, talk to your Realtor, have them do a CMA on the property and put in an offer 20% below the CMA estimate. Bank don't want to hold on to inventory, they rather get rid of the properties they have. As long as your offer is reasonable, and you targeted the right price with your Realtor (Which comes at no cost to the buyer) you should have no problem.

Hello Izzy!

There's a beautiful 3 Family Brownstone on Decatur St. It's a little bit higher than your price range, but not by much. If you are really looking for an investment, the fastest moving area in Brooklyn right now is Crown Heights. They are rapidly doing alot of business construction and alot of the trendy crown are staking their claims...

Give me a call anytime.

Luke Constantino
Commercial | Residential
REMAX PARK SLOPE
Direct: (212) 300-3919
Lukeconstantino@remax.net
http://LukeConstantino.com
0 votes Thank Flag Link Sun Aug 19, 2012
Hello,

If you are serious about buying this house, have it inspected before you lock into a contract, just to make sure you didn't just contract a can of worms.

As for submitting an offer, talk to your Realtor, have them do a CMA on the property and put in an offer 20% below the CMA estimate. Bank don't want to hold on to inventory, they rather get rid of the properties they have. As long as your offer is reasonable, and you targeted the right price with your Realtor (Which comes at no cost to the buyer) you should have no problem.

Hello Izzy!

There's a beautiful 3 Family Brownstone on Decatur St. It's a little bit higher than your price range, but not by much. If you are really looking for an investment, the fastest moving area in Brooklyn right now is Crown Heights. They are rapidly doing alot of business construction and alot of the trendy crown are staking their claims...

Give me a call anytime.

Luke Constantino
Commercial | Residential
REMAX PARK SLOPE
Direct: (212) 300-3919
Lukeconstantino@remax.net
http://LukeConstantino.com
0 votes Thank Flag Link Sun Aug 19, 2012
As you probably heard yes you should inspect the home before contract and offer. For more information on Brooklyn Short Sales check the link below.
0 votes Thank Flag Link Tue Jul 5, 2011
Yes, conduct an inspection before entering into a contract; short sales are sold as is, and not all short sales are fast sales, therefore an inspection will let you know if the property is worth the wait....what is your agent/attorney advising...
0 votes Thank Flag Link Tue Jul 5, 2011
Always better to know what you are getting yourself into...ALWAYS inspect, even though the house may be "as is."

Timing for short sale purchases varies from bank to bank....be prepared. I have one sale that is about to close after 2.5 months. I have another short sale that has been in contract with the bank over 1.5 years!

short sales are not for everyone.
Web Reference: http://gailgladstone.com
0 votes Thank Flag Link Mon Jul 4, 2011
Thanks! The impression I got is that I need a real estate attorney before I submit an offer rather then anyone else in the industry.
0 votes Thank Flag Link Mon Jul 4, 2011
Hire a Buyer Agent. You will need one to ensure your money and contract are not winding up in the hands of the Seller who can't pay their mortgage. Always look at a house and if possible inspect prior to making an offer. Short sales are based on the NET TO BANK, and if you are going to ask for repairs or other issues to be resolved after they sign off on the sales contract, GOOD LUCK WITH THAT. There already is no money.

So, make sure you know what you're making an offer on before hand, and this includes inspecting if possible.
0 votes Thank Flag Link Mon Jul 4, 2011
Hi Rumahtinggal,

No, it's not better to inspect a short sale property before submitting an offer. What if your offer is not accepted? Then you are out the cost of the inspection. Make your offer with a home inspection contingency and only give a COPY of the ernest money deposit check with the offer. State in the offer that the ernest money deposit check will be submitted after acceptance of offer by the lender/investor.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes Thank Flag Link Mon Jul 4, 2011
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