Homebuyers looking for bargain real estate prices often decide to choose short sales. While they do provide an excellent way to enjoy a great price on real estate for sale, the process can take quite a bit of time to complete. Buyers that find a home they love will want to make every effort to ensure that the short sale purchase goes as smoothly as possible. The following tips can be used by buyers to make the process a smooth one, allowing homebuyers to close the transaction and get in their new home as quickly as possible.
Tip #1 – Hire an Experienced Short Sale Agent
One of the best tips homeowners can follow to ensure the short sale purchase goes smoothly is to hire an experienced short sale agent to help them navigate the complex process of purchasing this type of real estate. Although buyers may have worked with other agents in the past with success, it is essential to find an agent that has plenty of experience dealing with short sales. When interviewing agents, it is important to ask them how much experience they have working with these transactions. It is also a good idea to ask the agent how many shortsale transactions they have closed successfully.
A real estate professional that is experienced in shortsale real estate homes will be able to help buyers find short sales. They can also help show the homes, negotiate the purchase price and work on communicating with the lender as well. Buyers that use an experienced agent that has successfully closed these transactions in the past are more likely to end up with a successful close on the home.
Tip #2 – Work with an Experienced Closing Agent
Another helpful tip is to work with an experienced closing agent to keep the process moving along smoothly. Lenders only approve approximately two out of every five short sales, which is an important statistic to consider. However, having a good closing agent that is knowledgeable about this process will help improve the buyer’s chances of having the contract approved. It may even be helpful to have a good real estate attorney on hand through the shortsale negotiations, especially if specialized language or any provisions will need to be written into the purchase contract on the home.
Tip #3 – Have a Good Title Officer on Hand
Having a good title officer on hand is important when working to ensure the short sale process is a smooth one. Title officers should be used to do the initial title search on the short sale property being considered by the buyer. This ensures that all the liens attached to the property are seen by the buyer. If the title officer finds that the property has multiple lien holders, which may include real estate tax liens, second mortgages, mechanic’s lien, lines of credit or homeowners association liens, then it can be tougher to close on the short sale contract.
When multiple lien holders are in the mix, any lien holder may cause a problem in the process, even if the first lender approves the transaction. Buyers can ask their short sale agent or their real estate attorney for recommendations if they are unfamiliar with good title officers in the area.
Tip #4 – Understand What Makes a Good Buyer
Buyers should also understand what makes a good buyer to ensure the process goes smoothly. Good buyers are patient, they have their financing in order and they do not have any contingencies.
Patience is required to keep the process flowing, since it can take time to get the approval of the lender on the sale. Even if there is only a single lien holder, buyers may end up waiting for some time for the approval to be offered. It can take longer to get approval on properties that have multiple lenders.
A good buyer should also have their financing in order for the best results. Cash offers are definitely attractive to lenders. However, even for buyers that are not able to pay everything in cash for the property, showing that the financing is in place is essential. For the best results, homebuyers should be preapproved for a mortgage. Buyers should also have a sizeable down payment so they are ready to close at any time. Being financially prepared will ensure that the short sale offer is viewed more favorable than offers from buyers that have financing that is not as secure.
Homebuyers should not have any contingencies to show themselves as a good buyer for the property. Short sales are not a good choice for buyers that have contingencies, such as needing to be in the home at a particular time or the need to close on a home being sold before purchasing the property. Flexible closing terms and “no contingency” offers are viewed in the best light by lenders deciding whether to allow the short sale transaction to be approved.
Tip #5 – Be Aware of Shortsale Risks
Before getting involved in the shortsale process, the process will go smoother and without as many disappointments for buyers if they are fully aware of the risks that come with these transactions. First, short sales come with the potential for rejection from the lender. Lenders are working to minimize their loss. Buyers that make their offers too short or buyers that ask for contingencies will often be rejected. Lenders can also make counteroffers, making the process even longer.
Bad terms are another risk that may come with short sale transactions. Sometimes a lender will decide to approve the transaction, but they may require that the seller agrees to repay the difference between the loan amount and the sale price. Sellers that are financially desperate may not find this option acceptable, which may lead them to back out of the shortsale. Terms in the contract that has been negotiated may be changed by the lender. This change in terms may not be agreeable to the buyer, which could lead to the buyer backing out.
Another risk to consider is that no repairs or repair credits will come with a shortsale property. The property will probably be sold “as is” by the lender. Since the lender is already taking a loss, they rarely agree to add repair credits. This means that buyers will be responsible for repairs.
Although these risks can definitely be overcome, to avoid any disappointments or surprises along the way, buyers should be well aware of these risks before deciding to pursue a short sale purchase.
Tip #6 – Offer the Right Price
To increase the chance of having the short sale accepted by the bank, buyers should work to offer the right price on the home. Buyers should avoid paying too much for the property but offers that are too low will probably be rejected by the lender. This means that buyers need to work with their agent to come up with a price that will be attractive to lenders while still allowing them to enjoy a good deal on the home.
Having an appraisal done on the home and comparing the home to comparable properties in the area can help determine value. To offer a lower price, buyers should be sure to point out needed repairs and the costs of those repairs to justify the lower price being offered. Keep in mind that banks do not want to lose more money. This means that buyers need to convince them that they price they are offering is reasonable and that there is little chance that other buyers will want to pay more than that price for the home.
Tip #7 – Keep Property Condition in Mind
Of course, buyers need to keep property condition in mind as well. Remember, lenders are not going to offer any property credits or repairs. This means that it is essential for a buyer to carefully look at the home and take the time to look for any damages that may need to be fixed later. As previously mentioned, buyers can use the property condition to help negotiate the price they want to pay on the home as well.