We get hundreds of calls a week from buyers asking the same question “How do I buy a short sale?” Buying a short sale is very different from a traditional sale. It is important you have the right expectations when purchasing a short sale as it can be a long process. Picking the right agent is also very important as they will be asked to provide documentation in a timely manner. Working with a buyer’s agent that is familiar with the short sale process will be very helpful for you as a buyer to know what to expect.
Is it worth the wait?
The answer to that is YES, absolutely. If you have time to wait, whether it is for an investment or your first home, short sales are WORTH the wait. The bank will accept 80% of fair market value and that fair market value has the repairs and condition of the home factored in. Make sure your real estate agent is running comps and making sure that what you are offering is something reasonable enough that the bank will accept at the same time a good deal for you. (Comps are recent sales in the neighborhood that are comparable to the property you want to purchase.)
Keep in mind that the price they list in the MLS (Multiple listing service) does not guarantee that is what the bank is asking or going to require. Look for the “approved price”, and ask a lot of questions. The more you know, the better you can make an informed decision about whether this is a good deal or not. If you know what the bank is going to require in price the process can be a very short one to purchase. That is the primary reason why these questions below are very vital to ask if you want to purchase a short sale. Ask your agent these questions:
- Is there an approved price? (This is so important, if there is NOT an approved price, the agent is listing the home and is reducing the price until they get an offer. In this case the price does NOT indicate what the bank will accept) Not having an approved price yet is not necessarily a bad thing, it just means it might take a bit longer to wait for the approved price to come back once the offer is sumitted.
- Do you have an offer that you have submitted to the bank? (A lot of times, listing agents do NOT know what they are doing when it comes to working a short sale. It is important your agent is asking what has been done as far as offers. That way you know if you do submit an offer, you are offer #1 or #15.)
- Where are you in the short sale process? ( A lot of inexperienced agents wait until they get an offer to even submit the short sale package for the homeowner to the bank. If that is the case you’re at the very beginning and this process will not be a short one.)
- Are there multiple liens on this property? (If there is more than 1 lien on the property and the agent is inexperienced this process can drag on. You want to find out is it more than just 1 lien and if so are they taking care of it? Know what you are getting into before you sign a contract and wait 6+ Months for something to close because the listing agent cannot get the other liens released.)
I hope if you are considering purchasing a short sale these questions are helpful to you and your agent. If you are in the DFW area and you have questions about purchasing a short sale feel free to call our office.