Short sales can be a great time to score a deal on a great property. You can find some major scores, which is the only reason that buyers mess with them, because they can be very complicated. Unless its a really good deal, most buyers feel that they aren’t worth the trouble. So what are short sales? Short sales are sales on homes that allow a borrower who can’t make their payments anymore, put their home on the market for less than what they owe on it. The profits from the home go to the bank. Therefore, the bank has to approve any offer that comes in. It isn’t the buyers choice as to what offer is accepted, and what offer is not accepted.
The only time that a lender will do a short sale is when it will cost them less than having to foreclose on it. Every buyer that has a lien on a short sale property must accept the terms, they don’t have a choice. Here are four moves for buying a short-sale house that you’ll need to know if you decide to.
The first thing you should do is make sure that you’re a even a good candidate. Buying a short sale property is all about presenting the bank with a deal that it can’t possibly turn down. The type of person that banks generally approve for a short sale property are those who have a very large downpayment, have already been approved for a loan, and give no contingencies regarding the contract.
The second tip is that you should hire a realtor who has done short sales before; and plenty of them. Most banks have companies that help them specifically with short sales. Therefore, you’ll need a person of your own that can match that level of expertise. Read: Buying a Home in a Short Sale Can Be Profitable.
Realtors who have done many short sale listings will know how much a house should usually go for in a particular area. That way, you’ll know if you should do the deal or not. You’ll have someone on your side that will truly let you know if it’s actually a good deal or not. If a short sale home has been on the market for a very long time, you can go ahead and assume that the house either has a seller who doesn’t care much about selling, or a very unknowledgeable realtor.
Your realtor should talk to the seller’s agent to see if the bank has even agreed to sell the house for less than is owed on it; or if the seller is wishing that’s going to happen. If it’s the second one…then you might be completely wasting your efforts.
Next, you should offer the right price on the house. It can be hard to know how much to offer for a short sale house. It isn’t like buying a house the traditional way. You must know that the list price is not a firm price; it is the price that the seller wants. It doesn’t mean thats the price that the bank will actually accept for it. Sometimes, you’ll see agents listing homes at a bargain, only to find out later on that the bank was never going to accept that little for it. If a short sale house has been listed for more than a month, you’ll probably be able to negotiate with the seller. This will all depend on where the house is located, as well as the condition that it’s in. Obviously, if the house is in a great neighborhood, and in great condition, you probably aren’t going to score a huge deal. For further reading, see: Common Errors When Buying Short Sale.