Should Make an Offer on Short Sales?
You have been searching for the perfect home for weeks. Picking out listing after listing online and have even viewed a few of them in person. You finally think you have found the perfect one! But it’s a short sale, take your hand off the mouse and step away from the computer. Not so fast, with some basic knowledge you can decide whether to walk away or make an offer.
Most agents will tell their buyers to stay away from short sales no matter how attractive the price or property may be and that is the general advice that is given across the board, but it is wrong. Some short sale listings are perfectly viable while there are others that are not.
Some short sales are priced ridiculously low; typically these are the ones that you should stay away from. While others are priced at a competitive price, while lower than their comparable sales, they are not absurdly low. These are the ones you stand a decent chance when making an offer. Why should you stay away? Because short sales can take anywhere from 2-4 months on average to close and the bank does not have to accept your offer especially if the property is priced at an absurdly low price. If you are not prepared to present an offer above a superficial price, then you should pass.
When dealing with a short sale, your agent is your best friend and most important asset. Your first move should be to ask your agent to find out how much is owed against the property and how many loans are recorded. Often times when obtaining a loan people receive two mortgages. The first and second mortgage company must both agree on the sales price of the home. Some lenders also have a reputation for being very difficult to work with. If your agent is an experienced short sale agent they will know who they are and advise you accordingly.
Ask if your agent has received a complete short sale package from the seller which should include the following at minimum:
*W-2’s
*Tax returns
*Payroll stubs
*Financial statements
*Bank statements
*Seller’s hardship letter
Make sure these documents are on hand, you don’t want to delay the process because the listing agent doesn’t have the required documents.
When you make an offer that is agreed upon by both you and the home owner the bank will want a copy of the offer along with a copy of the listing agreement. Be prepared for the lender to renegotiate commissions and refuse to pay for certain or all items such as home inspections or protection plans.
If everything goes as planned the lender will approve your offer on the short sale and you can begin the stages of escrow!