Short Sales

At present, our current market has an abundance of properties that are in the process of being sold 'short'  by owners. This includes home owners that cannot meet their house payments for one reason or another, homes that have devalued or perhaps homes that have become overencumbered where people may owe more than the home is worth. While this is a difficut and distressing situation for sellers, it is indicative of a market adjustment and provides an opportunity for buyers with financing and patience to pick up property for a good price.

What is a Short Sale?

A short sale is when a lender on a property agrees to accept less than the total of the amount due. Sellers must qualify with their lenders to be eligable for a short sale. If it makes better financial sense for the lender to foreclose on a property, then a seller may not qualify for a Short Sale.

Buying a Short Sale

There are several things you should consider when bying a short sale.

Inspect Thoroughly- Unlike a Trustee Sale or a Sheriff's Sale, you are usually allowed to inspect the home before making an offer although sales are 'as is'. Know what you are getting yourself into before you buy.

Do your homework- Check out the public records. Ask your agent to discover who is in title and how much is owed to whom.

Discover the financing-If there is one loan on the property, the process is long but not overly complex. If there are two loans on the property , you could have a problem. The two lenders (or more!) must agree how to settle the debt between them. This takes time and will ultimately affect the purchase price offer.

Why would a lender take less than is owed? - Here are 5 reasons:

0. It keeps them from having "bad debt" on their books. Bad debt limits their ability to lend money
0. It saves the legal fees of foreclosure.
0. There is no eviction process to worry about.
0. They won't have to hire a contractor to rehab the property.
0. They don't have the risk that the market will decline further.

Experienced Agent-Real Estate Agents are not accountants or lawyers but highly trained professionals who can advise and help you to work through the short sale process.

 Get pre approved for your financing-This one is a no brainer but you must be pre approved for a lender to consider your offer as a serious one. You will need to include your pre approval letter in your documentation file that will accompany your offer.

Be Prepared- In fact, this can't be stressed strongly enough. Be prepared to wait. Be prepared for unforseen delays. Be prepared to have all of your required documentation prepared and complete before you submit your offer. (An omission can result in your case being sent to the bottom of the pile causing you to wait weeks and weeks unnecessarily.) And remember, once your seller accepts your offer, you do have a contract but with a contingency that the lender must approve the offer . If the lender does not approve the offer, the buyer may then withdraw from the purchase.

Negotiate Commission?- Be prepared to negotiate the payment of the agents' commission. Remember, the seller is experiencing a shortage of funds and ultimately, the lender who is losing money on the deal, will be paying any commissions owed.