Tips for Short Sale Buyers
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Colleen Frasco, Realtor, MBA, DRE # 00997160 415-302-5341: 415-925-3222 cfrasco@fhallen.com |
Frank Howard Allen 511 Sir Francis Drake Bl Greenbrae, CA 94904 Fax: 415-461-5215 Cell: 415-302-5341 |
Short Sale Tips
A short sale is a type of transaction subject to a lender's approval in which the lender consents to a sale of the security interest for less than what is owed on the note and accepts the proceeds in full satisfaction of the loan amount.
In order to successfully identify and complete a short sale transaction, keep in mind the following tips:
1. Search specifically for short sale properties--The majority of short sales are listed by real estate agents and are listed on the multiple listing service which feed into various websites such as, Realtor.com, Trulia, Redfin, etc. It may be difficult to determine which properties are short sales and which are traditional sales. Real estate agents have the capability to search only for short sales and thus can supply you with a good representation of the short sales in a specific area.
2. Select a real estate professional wisely. Real estate agents experienced in the short sale process can assist buyers navigate the process and negotiate the purchase to successfully close the transaction. The short sale buying process is far more complex and much longer than a traditional sale (60 days to over one year), therefore knowledge and experience with this particular process is critical.
3. Investigate the mortgage and liens on the property. An experienced title officer should do an initial search on a short sale property to determine all the liens attached to the property. If multiple lien holders eixst (e.g. second or third mortgage or lines of credit, real estate tax lien, mechanic's lien, homeowners association lien, etc.), it can delay or prevent the property from closing. Any of the lien holders could present an obstacle in the transaction even after a long and difficult lender approval is obtained.
4. Have Property Inspections. A short sale is not bargain if major, unexpected repairs are discovered AFTER the closing. A complete and thorough home and pest inspection will provide a clear picture of the property's condition and help the buyer decide if they want to move forward with the purchase.
5. Negotiate. Lenders strive to minimize their losses to the greatest extent possible. If the buyer submits an extremely low offer, far below the fair market value of the home, it is likely that offer will be rejected or perhaps the lender will make a counteroffer. Buyers needs to establish their reaction to such a situation and be willing to increase their offer to close the deal or walk away if does not make financial sense.
6. Be Patient. Once you come to agreement with the seller to purchase a short sale property, the seller's lender (or lenders, if thdre is more than one mortgage) has to approve the sale before the property can close. If there is only one lender the process is faster, things become complicated and more drawn with multiple lien holders. Short sales, which have increased in volume and frequency, are overloading some lenders. It is wise to decide upfront if you have the flexibility to wait up to a year or more.
