Buying a Short Sale

Why Buy a Short Sale?

Buying a property in short sale can be a big hassle, so why consider it? Basically it all boils down to the bottom line - you will usually get the property for a (substantial) discount. Lenders may even be willing to offer favorable financing terms in order to move the process along and secure their original investment. Additionally, the owner in default typically plays an active role in the short sale process, which means you will have their cooperation (unlike a foreclosure). For help with the process please Contact Me.

To qualify for a short sale, homeowners must prove all of the following circumstances:

Financial Hardship

A situation is causing the borrower to have trouble affording their mortgage.

Monthly Income Shortfall

Basically the borrower has more expenses than income, which will, or already is, preventing them from affording their mortgage.

Insolvency

The borrower does not have significant liquid assets to allow them to pay down their delinquent mortgage.

Working with Representation

Whether you are a first-time homebuyer or experienced investor, it is always wise to work with a REALTOR® when dealing with short sales. The right professional can move you through the process more efficiently, and guide you through the challenges that commonly accompany distressed sale transactions. When interviewing potential agents, be sure to inquire about their experience with short sales and find out if they hold any designations for buying and selling distressed properties.

Making an Offer

An experienced REALTOR® will be extremely beneficial at this juncture in the buying process. Here are some key factors in a successful offer:

1. Request a written confirmation from the homeowner in default that the lender has received the hardship letter and documents required for a short sale application.
2. Short sales are commonly multiple offer situations. Be sure to factor into your offer that there is likely to be more than just your offer up for consideration.
3. Your offer should always be contingent upon the lenders approval within a set time frame.
4. Use an addendum to outline any contingency terms and conditions. Remember that most short sales are “as is” and a lender will grant few, if any, repair requests.
5. Even though most short sales are “as is”, it is still crucial to conduct a home inspection. You should assess the bargain potential of a property by adding the cost of repairs to your total offer.

This information is meant as a guide. Although deemed reliable, information may not be accurate for your specific market or property type. Please consult a REALTOR® professional like me for more information on making a written offer.