1. Get help from a short sale expert
Not all real estate agents today have worked with properties that are offered as a short sale. An agent experienced in short sales can identify which homes are being offered as short sales, help you determine a fair purchase price, and advise you on what to include in your offer to make the lender view it favorably. Ask agents how many buyers they’ve represented in short sales and, of those, how many successfully closed the transaction.
2. Build a team
Ask agents to recommend real estate attorneys knowledgeable in short sales. Your attorney can do a title search to identify all the liens attached to any property that peaks your interest. You must understand that because each lien holder must consent to a short sale, a property with multiple liens, like first and second mortgages, mechanic’s and condominium liens, or homeowners association liens, will be harder to purchase. Although you will have to pay for the title search up front, but it can also help weed out less desirable properties requiring multiple approvals.
3. Know the home’s fair market value
By agreeing to a short sale, lenders are consenting to take a loss on the loan they made to the sellers to purchase the home. The goal of the lender is to keep those losses as low as possible. If your offer is substantially less than the home’s fair market value, it may be rejected. Your agent can help you identify the price that’s good for you. The lender will determine whether approval is in its best interest.
4. Expect delays
There are two stages to a short sale. First, the sellers must consent to your purchase offer. Once you have come to an agreement with the seller, then they must submit it to their lender, along with documentation to convince the lender to agree to the sale. The lender approval process can sometimes take weeks or months, even longer if the lender counteroffers. Expect bigger delays if several lienholders are involved; each can make a counteroffer or reject your offer.
5. Firm up your financing
Lenders will weigh your ability to close the transaction. If you have a pre-approval letter from your lender for a mortgage, have a large downpayment, and can close at any time, they’ll consider your offer stronger than that of a buyer whose financing is less secure.
6. Avoid contingencies
If you must sell your current home before you can close on the short-sale property, or you need to close by a firm deadline, your offer may present too many moving parts for a lender to approve it. Also, consider ordering an inspection so you’re fully informed about the home. Keep in mind that lenders are unlikely to approve an offer seeking repairs or credits for such work. You’ll probably have to purchase the home “as is,” which means in its present condition.
The brokers at Meadows Mountain Realty have the knowledge and experience to help you with a short sale.
For a list of short sale and foreclosure properties in Highlands, Cashiers, Sapphire and Glenville North Carolina, visit our website.
This article includes general information about tax laws and consequences, but isn’t intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice.