We all want to purchase real estate at a good and fair price. If we can get a great deal on a property, that’s even better. One way to get a really good deal is to purchase a short sale. A short sale basically means the owner of the property is selling it for less than their mortgage. The financial institution may or may not approve of this sale. Many times, the owner is already in default of the loan and the bank is willing to accept a lower payout. If a short sale is something you want to pursue, here’s what to anticipate.

1. A possible hostile seller or tenant living in the property: Why hostile? They are selling their property below value in order to walk away. The bank is in charge. The current owner may be struggling with other financial issues, may be close to bankruptcy, or may have other stresses you aren’t aware of. If tenant occupied, the seller may be forcing them to move from their current “home”. In either case, the listing agent may not be able to secure appointments to see the home at times that benefit the buyer. You have to be flexible and patient. There are even times when someone may buy a property unseen for this reason.
2. A property that is distressed and in poor shape: If someone is short selling their home, there’s a chance it’s not been taken care of. If a seller plans to walk away from their mortgage, they may also trash the home before leaving. If they have been unable to make their mortgage payments, its likely they have not had the money to keep their home updated and in good shape. You may encounter soiled carpet, nasty appliances, scrapes or holes in the walls, and even strange odors. Make sure you are allowed to have an inspection during your due diligence period.
3. A long wait from the bank to see if they will approve the final number: The bank will decide if they will accept your offer. Banks and large financial centers sometime move slow. There are committees and approval processes that can bog down the acceptance. You may feel you are getting close, only to have them delay the process again. In most cases, the closing process may take up to 180 days. Be prepared to wait.
4. Lots of paperwork provided to the bank: As in all mortgage processes, there’s quite a bit of paperwork. Both the buyer and seller will have to provide documents in order to make the process work. As a buyer, you must be diligent in providing what is asked of you. You are also at the mercy of the seller. They may delay the process if they do not provide requested documents in an urgent manner.
5. A long line of other buyers waiting to cash in: Cash is the preferred payout to the bank in a short sale situation. If you are providing cash, be prepared to show “proof of funds”. You can provide the account paperwork, but black out your account numbers on the statement. If getting a mortgage, it’s essential you are pre-approved for the loan. Even a pre-qualified letter only confirms you are “most likely” to be approved. The bank will want to know you are solid before moving into the short sale process. Be aware, there are some banks that require the listing to be “marketed” for a time period. This can include listing the property on the local multiple listing service and can also include putting the property up for auction. Even though your offer is on the table, the bank may or may not try to get higher offers. If auctioned, you may have to bid as well in order to save your spot.

Short sales are still out there. They are not as numerous as in past years, but they can be found. Your agent can work with local banks, set up a search through the local mls system, and scour the tax records for upcoming foreclosures.

Being an agent is a little like being a detective. The right one is always looking under every stone for their client. They are working outside the box and will search high & low to find properties for their client. We do just that at Windsor. Call me today. I would love to help! 770-330-7477 or jill.rice@me.com