Buying Short Sales - A How to GuidePosted by Holder Salas on May 22nd, 2021 Buying short sales can be an extremely profitable way to purchase a single property or spend money on multiple properties. A brief sale is a real estate transaction where the seller has stopped making payments on the mortgage and has little, or no equity left in the property. The bank trying desperately never to have to foreclose (costing them thousands in legal fee's and time) allows many times for the seller to market the property for less then your amount owed and forgive the difference. In the bank's mind in any event they have a major problem if the borrower cannot make the payments: either they spend legal fees, time, and take the chance that the property will undoubtedly be in sub-par condition because of the fact that most times people are foreclosed upon the homes are not properly maintained. Then they need to get the property back shape hire and pay an agent to sell the house for the most they can enter a REO situation. OR the bank can allow the existing seller to sell for around the market will allow and just pay all costs from the sale (that they would need to pay anyway) and obtain a check for what the home netted after the sale, a much faster and many times a lot more profitable situation for the lender and better situation for the seller looking at the chance to be foreclosed upon. To find short sales your best bet is to hire the services of a real estate agent that focuses on them or at least has a very good grasp of how they work. A realtor that is very experienced inside them will be the optimum resource to locate, negotiate, and help you in the purchase of the property. Banks by their nature have become difficult to deal with and take an extremely long time to make decisions about what price they'll let their homes sell for. Losing mitigation department of the lender that is servicing the loan is definitely the department handling all of the banks deals in relation to short sales, and that department of the bank is in charge of obtaining the best terms for the lender and getting as much out of your assets they are in charge of. Many times losing mitigators can make bonuses for maximizing the total amount they get for the properties they are currently taking offers on. A sharp agent will be your very best asset in defending why, and what terms you as a buyer encourage from the bank handling the sale. The short sale process is quite detailed and every bank does things differently which means this should be looked at as a guide but for the most part it is the basic routine occurring when buying a short sale. First an offer is submitted to owner (which is still in control of the property) and they have to sign off on the offer first. As a buyer you will require a iron tight loan approval or often the bank will not even look at the offer for fear that you as a buyer are not even qualified. After you submit the offer, seller signs off on it your offer with loan approval will be submitted to the bank. It will require typically 3-6 weeks for the lender to react to the offer. What they do throughout that time is order an appraisal of the property to establish what the fair market value of the house is in it's current state, and marketplace. Then they put your offer in line that a loss mitigators desk these mitigators handle each of the offers and review them for the lender and because they handle sales for all over the country they are typically very supported and take a long time to respond. Once they do respond they will probably counter the offer submitted because they want to get the buyer to own most money for the bank as possible. Here's where quần short experienced and competent agent will help you to cope with the bank and negotiate terms on your side not the bank's. When all of the terms have been agreed to and the offer now becomes a contract escrow timelines start. (escrow is opened during the initial offer that is accepted by seller but hasn't yet been submitted to bank.) Most buyer's will request a house and termite inspection and they are conducted just as a normal deal is, the hang-up often is that any issues (and you will have issues) which are found with the home will never be able to be fixed in most circumstances since the seller has no money to do repairs. Buyer's who buy short sales should place offers low enough that when small issues are found during inspections they're OK with proceeding to close, if large major issues can be found in the home it is most likely best to get back to the bank and have for repairs or simply cancel your contract and discover another property. After inspections are complete the short sale follows the same closing activities as a normal sale does.Like it? Share it! More by this author |