Are you considering buying a short sale property? A short sale is the sale of a property where the net proceeds from the sale are short of the debts secured by the liens on the property. This can be a complex process with many moving pieces. But there are many reasons this may be a good choice for you. You will be competing with fewer buyers, and you may be able to purchase your home for well under market value. However, since the short sale process is different from a traditional home sale, here are 4 things you should know in order to have a successful short sale purchase.
You May Have to Wait If you put an offer on a short sale home, you may have to wait several months, or even longer before all stakeholders accept the offer. This is because a short sale property may have more than one bank with a lien on the property (second mortgage, line of credit, etc.). Be prepared to wait, and to move quickly once your offer is accepted, as you may have only a small window in which to take action. If you are not in a flexible living situation, a short sale may not be the right choice for you.
Stay Updated Keep in touch with your real estate agent and ask them to keep in touch with the listing agent, who can provide updates. Because short sales often involve a waiting period, it is possible your credit report will be reviewed again before you close on the property. Stay on top of your finances, and avoid making large purchases, making late payments, or doing something that could affect your credit negatively. Throughout the waiting period, make sure you stay in contact with your Loan Originator as well, and provide them with recent pay stubs and bank statements.
Be Prepared to Make Improvements Often, a short sale property will need considerable home improvements. Take this into account when deciding whether to submit an offer. If you do not have the time or finances to invest in repairs or improvements, you may want to reconsider purchasing a short sale.
Don’t Get Discouraged The long waiting period may be discouraging, but it is normal for short sales and is not necessarily a bad sign. However, a short sale is a fluid situation. After a lengthy waiting period, your offer may be rejected, or counter-offered. This doesn’t mean that you will never find anything. Continue to work with your real estate agent and lender and explore all of your options. They will help you find the right home.