10 Tips for Buying a Shortsale Home
The Initial Asking Price may be Different than the Final Price:
Sellers will ask low to get people looking at the property. They will do this before the bank is even aware of what's going on. The bank will always have the final say on the short sale. If you see something fresh on the market that's at a seemingly unbelievable rate, there's a good chance that it's not the final price. Sometimes, this can even drag out the process, as the bank can end up with several offers to reject or approve. As the buyer you should have an agent to work with during this process, as it can drag out much longer than you would think it should.
Check the Sellers Loans - 1 Bank is Best:
When multiple banks become involved, the process becomes not only more complex, but also, it can get weighed down in standoffs. Some banks may want different things, and want to give a loan to a different buyer than the other bank. Wait times can get bogged down when banks can't agree. It's best to stick to one bank.
If Your Offer is Real Low, You Will Lose Out:
Bear in mind that the seller and agent often set the price without the bank knowing. When offers come in that are under the banks expected offer, when the bank reviews them they will often reject low offers without providing any feedback to the buyer. Lenders can get so swamped on low price points, that you may not hear back for months, even with a solid offer. Be safe, put in a solid offer and stay positive.
Your Agent Needs to Look Around, Know the Market:
Your short sale realtor has to know the market - right up to the current month. He should be aware of what properties are selling, how long sales are taking, and the overall feel of the local market. As a seller, this is absolutely key because you need your agent to set a price point that will get approved by the bank. As a buyer, if the prices are accurate, you can get a better feel of the local market throughout your search.
Despite the Term, Short Sales Aren't Always Short:
Don't late the name fool you, short sales can be long, very long. You should not put all your eggs in one basket. You should stay active and have multiple properties you are interested in. Although laws differ, in most states (such as Florida) it is completely legal and risk-free to have multiple offers out at any given time.
If Sellers Have Too Much Net Worth They May Not Be Eligible:
Sellers that have a significant net worth may not even be eligible to list on a short sale. There have been cases where the seller even has to pay back the difference. This shouldn't have an effect on the buyer, other than the seller should be aware of having to legally pay differences.
If The Bank Has Greenlighted the Price, it Will Be Faster:
These are the ones to watch for. If a bank has an 'approved short sale price', then this can go quickly. This could mean any number of things, but the likelihood is that the bank took an offer, but the buyer did not end up buying the property.
Banks Differ In What They are Looking For:
When it comes to short sales, the bank has the final say. Banks often pick the most appealing buyer/offer that they have. But many banks differ on what they consider to be an attractive buyer. Some banks like cash, some like a high down payment, some just want highest price and others will look at buyer worth and credit.
Don't Expect Repairs and Upgrades:
If the house is in disrepair or even if there are minor repairs needed, don't expect them to come. It's going to end up being left to you, the buyer.
If You Are Approved, Close, Don't Wait:
In a traditional sale, there is often leniency with the escrow date - not so in shortsale transactions. Exceptions are almost never made. You need to get your paperwork done, and get your loans finalized as soon as escrow begins. Saavy realtors will have much of the paperwork ready even before the closing date. If there is a problem around closing time, let the bank know immediately. Time is of the essence at this stage.