Tips on Buying a Short Sale- By: Sonia Smith
Many people are familiar with the basics of home purchase. Everyone wants to find a great bargain. The good news is, most areas throughout the country are buyer’s markets and many home buyers are giving out low offers almost the point of being brutal about it and demanding fierce contracts.
Most often, one of the best ways to build equity is buying through a short sale. In summary, a short sale is the process where a lender accepts an amount that is lesser than the amount owed. Below are a few tips on buying a short sale.
- Look for a realtor that you are comfortable working with and has a thorough experience in selling short sale homes. An experienced realtor will be able to fire the right questions to the listing agent and the short sale negotiator to determine if the process is moving on and to be able to estimate your waiting period. The realtor would also know if you should hire a third-party negotiator to facilitate the process.
- Timing is of utmost importance when buying a short sale home. Receptive contract contingencies such as financing and home inspections should be started the moment the short-sale letter of acceptance from the lender is received.
- Many lenders would require a pre-approval letter or proof of funds along with the offer. The stronger the letter, the better it will appear to lenders. Allow the lender to pull your credit; provide documentations like proof of income and employment that an underwriter will need. As soon as your offer is accepted, the pace will be much faster.
- Make sure to research on the short sale process. Since a short sale is a different process from a normal seller and buyer situation, the negotiations will entirely be with the mortgage lender. Lenders will try to look for a fair market value to recoup the value of the loan. Thus, you may find it difficult to convince the lender to budge on the price and unwilling to accept a low offer.
- You must exercise patience when buying a short sale. The time of waiting depends on where the negotiations are. Frequently, the listing price is only a tentative one instead of the negotiated asking price. In a typical home purchase, it only takes thirty days to be able to close the home deal. However, a short sale could take months to get all the documents and the paper works cleared to the lender’s liking.
Short sales can be great in finding a new home at a competitive price, but it could also mean a major headache that will last for several months. See to it that you are thoroughly informed about the short sale process from beginning to end. If a short sale appears too good to be true, it probably is. When in doubt regarding the process of the short sale, your judgment or the real estate investment, seek the help of a real estate agent who specializes on short sales and foreclosures or even a real estate attorney.
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