Purchasing a Short Sale home requires patience and additional documentation submitted with your offer, but it may be the path to finding your next great investment property or your family’s dream home.
What is a Short Sale?
There is more debt owed against a property than the property’s value. In a loan default situation, (pre-foreclosure) the creditor(s) may be willing to agree to allow the property to be sold for less than the loan amount and/or accept less than (or “short”) the amount owed as payment in full.
Should You Buy a Short Sale?
Before placing an offer on for a property that requires short sale approval, here are some items to consider.
Do you need to sell your current property in order to buy?
How much time do you have before you need to move?
Are you able to wait weeks or months before getting an answer on your offer?
Can you be flexible on terms and closing?
If you need a loan, can your lender close quickly upon approval of the offer?
Are you willing to purchase the home in "As Is, As Seen" condition?
Why Purchase a Short Sale Property?
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Most buyers place offers on Short Sale Properties for one or more of the following reasons:
There are no other properties available in the areas they want to live
Property contains most of the items on their wish list
Condition of the property
Not willing to purchase a home without property disclosures
Looking for a property under market value
Not in a rush and flexible on closing date
Not concerned if their offer is rejected
Why Does it Take So Long to Buy a Short Sale Property?
Short Sales have a longer approval process because:
Seller must qualify for a hardship
Sellers must provide documentation
An evaluation of market value must be conducted by the seller’s lender
More parties are involved in the approval process
How can a Real Estate Agent help?
Locate all properties that meet your needs including Short Sales
Qualify the Listing Agent
Collect market data
Compare the Short Sale Property with Your Needs
Provide you with community, city, and school Information
Schedule showings
Help you complete the paperwork
Present your offer
Schedule inspections
Make sure you get timely updates on the progression of your offer
Manage the transaction
Why use an Agent?
An agent
knows this niche market
can help you locate the right property for your family
works with a team of experts who are familiar with short sale transactions
are ethically obligated to protect you interest
What needs to be submitted with my offer?
Purchase contract
Short Sale Addendum
AS-IS Addendum
Fully Completed Loan Status Report or a Loan Approval
Verification of Funds If Paying Cash
Any Other Required Disclosures that may be required by the creditor
Purchasing a short sale property is complex and complicated transaction. Having an experienced agent who can guide you through the process is critical to a successful transaction. The up side to purchasing a short sale is that people who have the patience to work through the process may be rewarded with a bargain.
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Fred Shocklie is an Arizona Native and has lived and worked in the Valley for over 30 years. He is an expert in negotiation strategies, short sales, and real estate investing.
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