You're a good candidate for a short-sale purchase if:
â– You're very patient. Even after you come to agreement with the seller to buy a short-sale property, the sellerâ€™s lender (or lenders, if there is more than one mortgage) has to approve the sale before you can close. When there is only one mortgage, short-sale experts say lender approval typically takes about two months. If there is more than one mortgage with different lenders, it can take four months or longer for the lenders to approve the sale.
â– Your financing is in order. Lenders like cash offers. But even if you canâ€™t pay all cash for a short-sale property, itâ€™s important to show you are well qualified and your financing is set. If you're preapproved, have a large down payment, and can close at any time, your offer will be viewed more favorably than that of a buyer whose financing is less secure.
â– You donâ€™t have any contingencies. If you have a home to sell before you can close on the purchase of the short-sale propertyâ€”or you need to be in your new home by a certain timeâ€”a short sale may not be for you. Lenders like no-contingency offers and flexible closing terms.
If you're serious about purchasing a short-sale property, it's important for you to have expert assistance. Here are some people you want to work with:
â– Experienced real estate attorney. Only about two out of five short sales are approved by lenders. But a good real estate attorney who's knowledgeable about the short-sale process will increase your chances getting an approved contract. Also, if you want any provisions or very specialized language written into the purchase contract, a real estate attorney is essential throughout the negotiation.
â– A qualified real estate professional.* You may have a close friend or relative in real estate, but if that person doesnâ€™t know anything about short sales, working with him or her may hurt your chances of a successful closing. Interview a few practitioners and ask them how many buyers they've represented in a short sale and, of those, how many have successfully closed. A qualified real estate professional will be able to show you short-sale homes, help negotiate the purchase when you find the property you want to buy, and smooth communications with the lender. (All MLSs permit, and some now require, special notations to indicate that a listing is a short sale. There also are certain phrases you can watch for, such as â€œlender approval required.â€)
â– Title officer. Itâ€™s a good idea to have a title officer do an initial title search on a short-sale property to see all the liens attached to the property. If there are multiple lien holders (e.g., second or third mortgage or lines of credit, real estate tax lien, mechanicâ€™s lien, homeowners association lien, etc.), it's much tougher to get that short sale contract to the closing table. Any of the lien holders could put a kink in the process even after youâ€™ve waited for months for lender approval. If you donâ€™t know a title officer, your real estate attorney or real estate professional should be able to recommend a few.
Some of the other risks faced by buyers of short-sale properties include:
â– Potential for rejection. Lenders want to minimize their losses as much as possible. If you make an offer tremendously lower than the fair market value of the home, chances are that your offer will be rejected and youâ€™ll have wasted months. Or the lender could make a counteroffer, which will lengthen the process.
â– Bad terms. Even when a lender approves a short sale, it could require that the sellers sign a promissory note to repay the deficient amount of the loan, which may not be acceptable to some financially desperate sellers. In that case, the sellers may refuse to go through with the short sale. Lenders also can change any of the terms of the contract that youâ€™ve already negotiated, which may not be agreeable to you.
â– No repairs or repair credits. You will most likely be asked to take the property â€œas is.â€ Lenders are already taking a loss on the property and may not agree to requests for repair credits.
The risks of a short sale are considerable. But if you have the time, patience, and iron will to see it through, a short sale can be a win-win for you and the sellers.
I recently added short sales questions and answers to my blog. You can click on the link below to view. Let me know if you have any additional questions and/or concerns as it relates to short sales.
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Assoc. Broker | REALTOR | Appraiser | Property Manager
Solid Source Realty, Inc.
770-714-8714 Mobile Office
1. You make offer
2. Agent will submit offer to bank and agent will wait to see if bank accept offer
3. Agents who have listed the home for sell, they usually do a CMA, check the comps in the area to see what the homes is worth and list it for what the compasion are in the area
4. most bank send out for a BOP, Broker Opinion Pricing (on what the actual price of the home is worth).
5. The BPO is to make sure the Agent have listed the property correctly.