Purchasing a Short Sale property can be a time-consuming process, but you can also get a great deal on a house you love!
So, if you are:
- Not in a hurry to purchase your next home
- Comfortable with some uncertainty about that purchase
- Willing to search through dozens of listings
...then read on! We've put together a bunch of helpful facts, tips and strategies to assist you in the successful purchase of a Short Sale property.
Connect with a Short Sale Certified ZipRealty Agent today
If you want to make an offer on a home that is a Short Sale, the good deal you're likely getting comes along with a handful of complexities. We've put together some helpful information to help you as you work with your ZipRealty Agent on placing a bid, and hopefully purchasing, the Short Sale home of your dreams.
The Price is Right
When the bank agreed to allow the Short Sale, it hired appraisers to provide opinions on the fair market value of the home "as-is." The listing price takes these opinions and comparable neighborhood sales into account, so chances are you'll have little room to negotiate.
Because the bank will already be taking a loss on the sale of the home, it may be reluctant to agree to a credit for repairs. Remember that some Short Sale sellers often lack the resources to maintain full upkeep of the home. These properties typically need some TLC - ranging from new paint or landscaping to more significant repair issues involving roofing, plumbing, electrical, structural, etc.
The Bank has the Final Say
When the seller accepts your bid that's only the first step toward buying your home - you'll also need the bank to accept it.
- Until the contract is formally accepted by the bank, you should consider the seller's acceptance as a simple indicator that your offer is under consideration.
- The seller can accept and submit more than one offer to purchase for the bank's consideration.
- Your contract is not final until the bank decides that it is willing to proceed with it.
Contract Dates Can Change
Sometimes it takes awhile to hear from the bank, and the dates entered into your contract can (and likely will) be changed.
- Be prepared to be flexible about when you'll actually go into contract, and when you may ultimately close and own your new home.
- Have the funds dedicated for your Earnest Money Deposit and Down Payment readily available and liquid so that once a bank tenders its approval, you're able to meet your financial obligations under the contract in a timely fashion.
Delays and Associated Problems
When purchasing a Short Sale, you should expect delays. In extreme cases it can take up to six months to get approval from the bank. As a potential Short Sale buyer, it's important to keep the following in mind:
- Loan Implications: Delays in a purchase process may affect your loan terms. Most loan rates can be locked in, but the locks do expire. Consult with your lender specifically as to the time frame for your loan locks and opportunities for extensions, if necessary.
- Revocation of Acceptance/ New Buyers: While your process for approval is underway, the bank can consider other offers, as well as continue to market the property for sale and attract buyers who may offer a higher price. Be prepared that other offers may be presented that may ultimately trump your offer while you're waiting.
If the seller of the home on which you've made an offer is in the foreclosure process there is always a risk that the home could go to a foreclosure sale before you've completed the Short Sale process. Some things to ask:
- Has the seller received a Notice of Default from its bank?
- Has a sale date been scheduled?
- Has the seller requested an extension or continuation of the sale? Can we request a continuation of the sale?
When you find a Short Sale property you're interested in, here are 7 key questions you or your ZipRealty Agent should ask about the property's status:
- How many liens are on the property and what is the amount owed on each?
- Has a Short Sale package been sent to the bank/s and have they approved the Short Sale?
- Has the seller been served with a Notice of Default? How many months are they in default?
- Has a date been set for the foreclosure sale?
- Has the property been appraised by the bank and do you have the lender's Broker Price Opinion (BPO)?
- Has the bank previously accepted and rejected offers on this home? Are there currently any offers being reviewed by the bank?
- Are the HOA (if any) dues current? How far behind are they? Who is responsible for bringing them current?
Based on the area you're searching in, your ZipRealty Agent may have additional questions to add to this list. Additionally, please consult an attorney if you have any legal questions about buying a Short Sale property. ZipRealty Agents cannot provide legal advice.
What should you do to best work through the Short Sale process?
Given the complexities involved with the Short Sale process, you should work with a knowledgeable, experienced ZipRealty Agent who is Short Sale Certified and can guide you through every facet of the Short Sale procedure.
Your knowledgeable, Short Sale Certified ZipRealty Agent fully understands the complexities of the Short Sale Process and knows how to work through them on your behalf, including how to:
- Qualify sellers for Short Sales
- Negotiate with lenders
- Protect buyers
- Limit risk
Working with a Short Sale Certified ZipRealty Agent will give you the best opportunity to successfully purchase a Short Sale home with the least amount of hassle.
A Short Sale Certified ZipRealty Agent has completed one of the following courses:
"SFR gives [Real Estate Professionals] a framework for understanding how to direct distressed sellers to finance, tax, and legal professionals, qualify sellers for short sales, negotiate with lenders, protect buyers and more"
"A Certified Distressed Property Expert® is a real estate professional with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners."
"Five Star Short Sale Certification is a signal...that [ your Real Estate Professional] is prepared to walk both homeowners and lenders through the short sale process."