11 Short Sale Buying Tips
A short sale is not a normal sale and it requires some special attention. Below are 11 tips to make it a smoother process.
- The lender is in control of the price. No matter what offer the seller accepts it must be approved by the seller's lender for sale. Price negotiations can continue and should be expected on most short sales if the price is not acceptable to the seller's lender. Sometimes more money can be asked for by the lender over the agreed upon purchase price and it may be the buyer who needs to come up with the added money if the seller is unable to or the loan won't support it.
- Submit the best purchase offer you can. The for sale price is sometimes the wrong price. It can be too high and sometimes too low. If your offer is too low below market, the bank may simply ignore or reject your offer. They don't have to counter offer. Choose your price based on the current market value.
- Give enough time to close. Expect closing to take longer then a normal sale and even a bank owned REO sale. Lenders have many short sales and foreclosures on which they are working so you must be patient. In addition there are many more parties involved in the short sale transaction which have to approve the sale.
- The property is sold ‘As Is’ Sometimes the seller will perform some repairs, but expect the purchase to be "AS-IS." If the seller won't do any work then the seller's lender will not either and often then won't even pay for the home warranties on the home. If is important that an inspection is performed on the home so that you know what your getting into, especially if you have a VA or FHA loan which requires specific property condition and performance.
- 1st response to the purchase offer. If could be at best weeks, many months and up to a year before a lender will respond to your offer so don't start making big plans and packing.
- Expect last minute issues that need a resolution. As mentioned before, most lenders will make last minute changes based on current market information and these changes can affect the transaction.
- Don’t request higher then normal concessions. Lenders know what the closing costs are. Please be aware of what they will be. Discuss this with your own mortgage lender to see how much you need and be prepared to pay for any extras. Lenders rarely pay of extra things like junk fees, home warranties to name a few. Be prepared for slashed closing cost. They may not agree to 3%, you may get less and you have to be ready to cover the difference.
- Is the property seller cooperative. Most sellers want to cooperate in the short sale. There are many benefits for the seller to do a short sale, so there is some incentive. If you have a seller that is uncooperative expect the sale to have a very small chance of closing. It may be better to move on.
- The seller may not be able to contribute to complete the sale. Just because the seller is doing a short sale does not mean they have the money to contribute toward the sale. A short sale comes about from hardship in most cases, loss of job, death, divorce or medical reasons to name a few. If they seller's lender asks for the seller to contribute, sometimes if may the buyer who can do it instead of the numbers still work.
- Patience is needed: Your best asset in the short sale purchase.In the short sale transaction it is very important to simply be patient. Your threats to cancel won't motivate anyone to move faster. There is a process and you have to allow it to run its course. Further more, there is little the seller can do to speed up the process.
- Seller agent experience. Is the listing agent experienced and capable of handling a short sale? If they are not familiar with the short sale processes then you may want to go on to another home. Listing agents have a key role in the process and they need to be either experienced or at least know what they are doing to get anything done.
Organization, motivation and proper preparations help in the process, but threats don't, constant calls don't, neither does being rude.
There are thousands of short sales closing. Very often the wait is worth is as long as your are aware and prepared for it.
Phoenix Home Buyer's Guide