Buying a short sale
With the down turn in the housing market and most home owners owing more on their homes than the home is worth, it does not sound as a good investment to keep on hanging onto a sinking ship. Basically, a short sale in real estate is when a home owner allows his or her home to sell for less than what it’s worth.
It is selling the property at a loss and the process is usually managed through a loss mitigation process where the debt owed on the mortgage is negotiated down to the amount where the property can be sold.
There is a popular saying that one man’s meat is another man’s poison. With the present state of affairs in the housing market, individuals flush with cash can take advantage of this opportunity and snag up homes which are being sold for far less than what they are worth. There are several steps involved in purchasing a house in short sale, and it is very important to work with agents who understand the process.
Some of the things involved in short sales include:-
Do an internet research and locate homes that are available for short sale. Create a list of homes that you are interested in and make sure that the court ordered sale date is months away. It takes more than 30 days to put together a short sale deal and you want to make sure you have enough time.
Working with an agent that already has some experience in short sales under his or her belt, analyze the neighborhood; its history and future prospects, whose name is on the property's title. How much is owed to the lender. How many lenders are there and if a forclosure notice has been filed. Doing due diligence will help you reach a reasonable conclusion on how much to offer. You never want to pay too much on a property when a lower prize would just be fine.
Another unforeseen road blocks are liens. There are some many different types of liens that you need someone with some industry experience to navigate them and identify who the lien holders are. Liens like State liens, tax liens, labor liens etc must all be addressed.
Make an offer that is just right, not too low to warrant an outright rejection, but not too high an expense for you. As soon as the seller accepts your offer, submit documentation, such as preapproved loan if it applies to you, and purchase offer to the lender. The deal is not closed until the lender accepts your offer so sit tight.
Due to the demand for short sales and other mortgage and real-estate issues today, most lenders will take a little more time to respond to your offer, so do not expect the deal to be done overnight. Make sure you have a name and contact information to follow up with so that you can get updates on the situation of things.
This article provides an insight into how to buy a property on short sale. Remember that commissions are involved and the lender usually pays that commission, but watch out for a tough negotiation on the price since they are already losing money.