THE TOP 10 THINGS YOU NEED TO DO:
1. UNDERSTANDING THE PROCESS OF THE SHORT SALE: Before you start looking at homes or doing research. you need to know what the basic premise of a short sale is. When a home owner owes more than what the home is worth in todays market, they ask their bank to approve a sale of the home at the current market price.
2. UNDERSTAND THE TIMEFRAMES INVOLVED: If you are looking to purchase a short sale you need to be prepared to wait 3 to 6 months. If you need a quick purchase, a short sale may not be for you. In the best scenarios, it will be 2-3 months on average, worst case it could take 3-6 months.
3. GET PRE-APRROVED: It is important for you to not only get pre-qualified, but take the extra step to submit your financials to get pre-approved. A pre-quailification letter will be needed to submit an offer. Once the short sale is approved, you will only have 30 days to close, so be prepared.
4. HIRE A SKILLED BROKER. The first step is to hire an experienced broker, you can usually do so at no cost to you, they get paid their commission from the fee advertised in MLS by the listing agent and paid at closing. This way you will have someone assisting you through each step of the buying process. making sure your agent is WELL experienced in short sales is a must.
5. ASK IF THE HOUSE IS IN FORECLOSURE: The number one question is if the house is already in foreclosure, If it is, you need to ask if they set a sale date, also know as the auction date. if so, there probably is not enough time to get a short sale approved.This can save you time and money needlessly spent.
6. ASK AND CONFIRM HOW MANY MORTGAGES EXIST: Properties with only one mortgage are a lot easier to get a short sale approval. If there are 2 or more mortgages or liens, it will be even that much harder. Your agent or title company can pull a title report to confirm.
7. CAN THE SELLER COMPLETE A SHORT SALE: The seller should be qualified for completing a short sale by having a verifiable hardship such as not being able to pay the mortgage, loss of a job, job transfer, illness, divorce or death. Owing more than the house is worth and getting out of the mortgage is not a hardship in the banks eyes.
8. LISTING PRICE. The listing price is often not set by the bank or even the seller. It should be set at or just under current market value. Some agents will price the home artificially low which often leads to a counter offer higher than asking price by the bank-This can easily upset the weary buyer and kill a deal.
9. MAKING YOUR OFFER: First ask if there are any other offers submitted. Ask if there were any offers accepted that the buyer withdrew. It give hints on how far along in the process the seller is. Your agent should then gather what the home is worth in todays market and base your offer on that. Make sure you include any work/repairs that need to be completed in your initial offer. the bank will not likely renegotiate after accepting an offer and then you find something in a home inspection. Do not put any deadlines on your offer, the bank will not follow them, the process is what it is, it needs to take it’s course. Be prepared to wait 4-8 weeks for the bank to complete this process. They will check to see if the seller is qualified to complete a short sale, they will order an appraisal to check the value and then make a decision.
10. APPROVAL and CLOSING: The first thing is never consider the short sale approved unless in writing from the bank and signed by the bank and seller. Be prepared to close within 30 days of getting this approval. make sure you complete a walk through before closing. All occupants/tenants/owners should vacate the home. Make sure those items included in your contract are remaining in the house. Once you close, it is your problem so do not close without a walk through.