Do You Want to Buy a Short Sale Property?
February 4th, 2009 categories: Market Update, Tips For Buyers, Tips for Sellers
5 Things you should know to avoid loosing your mind in the intent:
Everyone is talking about short sales* and there is a reason for it. More than 30% of the properties listed for sale in almost every neighborhood are short sale listings. Listed prices are normally a bargain and way below regular sales and even below foreclosed properties*. The problem is that some prices are unrealistic and just a gimmick to attract buyers that will end disappointed because the bank will never accept the offer. One of my main concerns is that some potential buyers think those are realistic prices and use them as a reference for the rest of the market. As attractive as a short sale deal can be you must beware…
1.Set up your expectations upfront! This is not your typical real estate transaction. Since there are third parties involved: the lender(s), homeowners associations and/or contractors it takes time to get it approved. The time varies in every transaction and can be take as long as 9 months or a year is the buyer has the patience for it.
2.Make a Reasonable Offer! Before a bank accepts the price you are offering they send a Broker to prepare a Broker’s Price Opinion (BPO) and that is the value used by the lender as the property’s potential sale price. Remember that every dollar the bank accepts under the original loan amount is a loss for them.
3.Don’t fall in love! Falling is love is fun but not with a house that might never be yours. A Short Sale is a “business transaction” in which you pay with patience the money you are saving. Many things can go wrong or get delayed in the process… Until the last minute the transaction may fall thru.
4.The house should be vacant prior to the closing date! If there is a tenant living in the property make sure the seller has negotiated with the him his departure from the property at least 15 days prior to closing. You should not close while the tenant is in the property unless you want to become a landlord or you are willing to evict him.
5.Be prepared to spend a few hundred dollars and loose them! Until a short sale closes you there is no certainty that it will and you might end paying for inspections, appraisal and even an extensions of the locked rate.*It’s important to distinguish between short sales (properties where the loan(s) amount(s) are higher than the market price of the property) and Bank Owned/Foreclosures/REO’s (properties owned by Lenders after the foreclosure process is finalized).
