Buying Short Sales

What Are Short Sales?

If you’re interested in buying a property that’s listed as a short sale, here’s what you need to know.  If it is one of our short sales clearly we have a lot more control over the transaction and can more aptly advise you on the process.

How To Buy A Short Sale

Unlike in a foreclosure, the bank does not own the property in a short sale. However, because the bank must approve the sale (because it is the lender, not the seller, who will be taking a loss on the property) it will seem like the buyer is purchasing the property from the bank. Short sale transactions, however, can be much more time-consuming and patience-testing than foreclosure transactions and certainly more so than traditional sales.

However, there are a couple of ways in which the purchase agreement we will draw up with you is different. The contract will specify that the terms are subject to the mortgage lender’s approval. In a normal transaction, the only party who would need to approve the sale is the seller.

The contract should also state that the property is being purchased “as-is”. While it is acceptable to include language in the contract that allows you to back out of the deal if an inspection reveals considerable problems, in general, you should not expect the bank to lower the price to account for repairs if any problems are revealed. The bank is also unlikely to make any repairs, and the seller, being strapped for cash, is probably even less likely to help out. Given the situation, you’ll likely also need to have enough money for closing costs.

A Waiting Game

If you make an offer on a short sale property, be prepared to wait. Banks are notorious for taking as long as several months to respond to short sale offers.  Clients find that waiting for a short sale is well worth it as they are able to purchase a home for a sub-market price in exactly the area they have been targeting for years.

Buying Sacramento Short Sales

We have sold a hundred short sales, on both the buyer and seller side and negotiated additional hundreds more through our affiliated law firm.  We have the experience you need with most banks and servicers.  When looking for a distressed property specialist, please contact us.

Buying Short Sales.  As a buyer in the current real estate market, you are likely aware that  there are many short sale properties on the market. A short sale is a  property where the market value of the property is less than the loan  amount owed to one or more lenders. A short sale property may be a good  deal for you, but there are some things to know about short sales before  you begin the process of buying one.

A Short Sale Must Be Approved By The Lender.  Even  though a seller might accept your offer, it will be subject to approval  by the lender. Note that the listing price is set by the agent and  seller, not the bank. Some short sales on the market will be priced  extremely low – these extreme lowball prices will very likely not be  accepted by the seller’s bank.  A lender will also likely send out an  appraiser (called a BPO) to evaluate the property value to advise the bank accordingly.You should be prepared to offer a price near market value to have the  best possible chance of having your short sale purchase approved.

Be Prepared To Wait.  Even  after your offer has been accepted by the seller, the offer and sale of  the property still must be approved by the seller’s lender (or lenders,  if there is more than one mortgage).  This requires a long process of  paperwork and negotiations, which on average take about 3-6 months  (sometimes longer, sometimes shorter).  You should be prepared to  patiently wait for the approval, and once approved, you will begin the  escrow process.

Lender May Not Approve Any Repairs.  If  the short sale is approved, it will likely be as “as is” sale, meaning  the property will come to the buyer as is, with no repairs done by the  seller. While standard sellers and even REOs may repair property defects  or offer credit for repairs, it is far less likely for this to happen  in a short sale. It is important to conduct an inspection of the  property to make sure there are no deal breaker problems, and that you  are prepared to make any needed repairs to the property.

“Short Sale Approved” Prices are Quickest. Though  short sales may not always be short, making an offer on an “approved  short sale” can be a quicker process.  An approved short sale has a  price that has already been given the green light by the bank.  This  could be due to the fact that another interested buyer made an offer  that was approved, but did not end up sticking around to buy the  property.

Work With An Agent Experienced in Handling Short Sales.  Buying  a short sale can be a very tricky and complex process, so it is  extremely important to choose a Realtor with short sale experience. Make  sure you ask your agent how many buyers they have represented in a short  sale, and how many they have successfully closed. Having an experienced  agent on your side may be the difference between getting your short  sale purchase approved or not. A qualified real estate professional will  be able to show you short sale properties, get your offer accepted,  help you negotiate the purchase when you find the right property, and  facilitate smooth communications with the lender.

We have closed many short  sales and have an extremely high success rate at getting client’s offers  accepted and approved.  We stay in close contact with the seller’s agent  to push the process along. We also have very close upper management  contacts at all of the major banks and with many of their negotiators, so we can help get the short sale  expedited or issues addressed if need be.

While there are some caveats to buying a short sale, if you have the time and  patience to see it through, short sales can be a great opportunity to  find a property you like at a competitive price.

We are experienced Sacramento Real Estate Attorneys and Sacramento Realtors. We are a unique and powerful combination and can help you buy Sacramento Real Estate homes or sell Sacramento Real Estate homes with proven results, legal advice and the strategy needed to give you the results you want. Contact us today by clicking HERE or by calling 916-378-5760. We look forward to helping you with all of your Sacramento real estate needs.