You can’t be in a hurry. If you have a deadline to be out of where you’re currently living in 45 days, for example, don’t look at homes being sold as Short Sales. It’s possible that you can make that move in deadline, yet it’s not a sure thing. I’ve had Short Sale approval in less than 30 days and a few others that have taken just over 90 days. The norm is somewhere in between.
Hire a Realtor that knows Short Sales and will show you Short Sales. Ask them what they think about a Short Sale. You want to make sure that the Realtor who will be representing you, believes in a Short Sale, so ask them. If they express a lackluster attitude about Short Sales, find another Realtor. This may be contrary to belief, yet trust it.
Once you find a home that you want to put an offer in the home, have your Realtor look at comparable sales and present your offer according to the comparable sales. You offer needs to be within range of fair market value if you want to have any hope of your offer being Short Sale approved. Remember your offer must be approved by the Seller’s Lender and they will order a BPO (Brokers Price Opinion) which is a little bit like an appraisal to determine the home’s value.
If you need assistance with closing costs, don’t think that a Short Sale isn’t for you thinking the Seller’s Lender will not approve a Seller Contribution. I’ve seen some Lenders even approve a 6% Seller contribution yet this isn’t the norm as most will settle upon a 3% Seller contribution. It all boils down to what the Seller’s Lender will be netting in the sale. It’s all about the number!
Make sure that you have received a solid Pre Approval from your Lender if you’re financing, as the Seller’s Lender will want to see your ability to gain financing. You want to have your Lender review your credit, debt, income & assets; you don’t want to simply have a phone conversation of this with your Lender, you want to submit documents to them for review. Why is this important? Neither the Seller of a Short Sale or you, as Buyer, wants to wait the time required to gain Short Sale approval only to then find out months later that you aren’t getting a loan. You want to know before you submit your offer. It puts you in a stronger position for negotiating.
The need for PATIENCE, yes, I do mean PATIENCE. The Listing Agent for the Seller who is selling home as a Short Sale, should provide your Realtor with routine updates of the approval process.
You’ve now received Short Sale approval. The balls in your court now.
If you didn’t complete your inspection prior to your offer, you’ll need to do that now. Don’t think that just because it’s a Short Sale that the home will be a mess of repairs; not true. I’ve closed on many Short Sales where the home was in perfect condition. Yet, there are some Short Sales that weren’t kept up due to financial reasons and there may be repair issues. Repair issues can be prevalent in a non-distressed home. Lack of money, isn’t the only reason for homes needing repairs.
You’ll need to finalize all your preparations that include, financing, insurance, etc., to plan for closing
Don’t be surprised if the Short Sale Seller doesn’t attend closing. It’s a difficult time for many homeowners and many will do closing through the mail. Yet, don’t worry, you’ll have your keys, remote controls, etc.