Most of the buyers pursue short sales hoping to get a good deal and think to buy a short will provide them with this opportunity. Below are the things which you need to read before buying a short sale home.
So, whenever you come across to see the prices for the list of homes and before you opt to make any big decisions seeing the low prices, it is always advisable to get a piece of advice from your agent.
Ask him to call the listing agent to inquire is the homes available in the list is for short-sale or not. It will be helpful to you to make an offer on a pre-foreclosure, short sale home.
But still it is not as simple as it seems to buy from a short sale as most of the buyers close it from short sale within a month, but few waits for about four to six months to close on a short sale or sometimes much longer than that.
Definition Of Short Sale
A short sale means that the lender of the seller is accepting the discounted payoff to release the existing mortgage. But that is not to say that bank will accept any offer which you are going to make as it is listed in the short sale, it does not matter whether the seller has accepted your offer or not.
You should always make a further inquiry to know that whether the seller is in default or not and have stopped paying the mortgage repayments and that leads the lender to opt for the short sale.
A lender can consider the short sale and can also accept the offer made by you if the seller is current and the value has fallen. It may also happen that the seller has to pay more amount than the price of the home or worth of the home, so the discounted price may bring the price in line which can be about of market value but never lower than it.
Do Your Research Before Taking Big Decision
It will be beneficial for you if you perform your research before making any offer or accepting the offer given, you can tell your agent to find out about the person who is in the title and if foreclosure notice is being filed or not and the exact amount which is owed to the lender. Making such inquiries are critical as it will help you to make your offer to purchase the home.
In case the seller is indulged in two types of loans then you could face some problems - as the first mortgage lender's position is protected by the second lender, only in the case if the second lender does not want to opt for a foreclose.
Let's understand it by an example if the seller owes about $1,00,000 to the first lender and about $30,000 to the second lender. If your offer is $1,00,000, then there is not anything left for the second lender, and you should understand that the first lender has to give something to the second lender to seek his cooperation for the hole dealing.
Take Advice Of Hire A Short Sale Agent
You should always take help of short sale specialist agent to help you out with the whole transaction and always keep in mind that if your agent is not having experience of a short sale or never handled a short sale, then there is always a possibility that it may strike you.
Always hire an experienced short sale agent who can anticipate what is going to come and help you out with problems which can occur in the whole process.
An experienced short sale agent will always make the right decisions at the right time for quick dealings and will also protect your interests while doing the transactions. As you opt for the short sale, you would not like to miss any important details because of lack of experience and realize that you won't be able to close the transaction promptly as no one has done the tasks at the proper time.
Recognizing The Sell & Property Qualifying For The Short Sale
It may happen that lender will not agree to the short sale unless the seller has any equity, the lender would also like the seller to repay the difference between your selling price and the existing loan amount.
Sellers are always required to provide the lender with the hardship letter and dealers may also owe the taxes on the sum of the debt that is forgiven.
Submission Of Complete Documents With Purchase Offer To Lender
If the seller has accepted the offer, you have made then the next step would that the listing agent will forward it to the lender for seeking his approval. Lender's approval is needed for the deal and lender would also like to have the copy of your 'earnest money deposit' and 'proof of funds.' You should always be ready if the lender asks you to increase the price.
It may also be possible that the lender would like to see if you owe any loan and whether you have preapproved or not. It is advisable to send the pre-approved letter for the lender as it will help your agent to send the list of relative sales that support the price which is offered by you to purchase the home.
After submitting the required documents and making the offer as per the lender's suggestions and apparently, it should suits to you also, give the bank some time frame for the response and after waiting for sufficient time, you can always cancel the deal.
Few banks submit short sales documents to the committee, but most of them take their decisions within 2 -3 months. Your listing agent will provide you with the appropriate contacts of the lender, and as a buyer, you cannot communicate with the lender directly so have some patience for further proceedings.
Be Aware Of The Functioning Of Short Sale Commissions
It does not matter what the seller has agreed to pay, but the lender has the right to approve the committee. It may happen that the seller is not keeping any money, but the seller still needs to pay the commission from the sale proceedings.
In most likely situation the lender will negotiate the fee directly with the listing broker, who will further share the commission with the agent you have hired.
In case you have signed any buyer's broker agreement with your agent, inquire if the agency can waive the difference due otherwise you have to pay it from your pocket.
After completion of all the required procedures, as a purchaser, you should always obtain the home inspection.