Should I Buy a Short Sale?
For an investor, buying a short sale can be a viable option. However, the timeframe from the offer to the close is totally up to the lender.
The process begins with the seller sending the required documents to the mortgage lender seeking the approval to move forward with a short sale. Hopefully, the seller has hired a realtor who understands short sales and has appropriately advised the seller and prepared a well thought out package for the lender.
Following is a typical buyer’s short sale process:
1. Make sure that the home you will be making the offer on meets your investment criteria. An experienced investment Realtor will be able to work with you in this regard.
2. Make sure you use a realtor that understands the investment buyer and can advise you if the Short Sale experience is right for you.
3. Make your offer using the appropriate forms. This will give you the best chance of submitting a bid that the lender will approve. This will be written and accompanied by several documents which acknowledge that the home will be sold “As is”; the seller will not make any repairs on it, and an addendum that allows you to back out without penalty.
4. Your offer will be submitted to the mortgage company together with a copy of the projected HUD-1 (prepared by both your realtor and the seller’s realtor) and proof that you have the financing needed to purchase the home. Now adays most mortgage companies have a multitude of offers on short sales waiting for response, so that your wait for a lener response could vary from a week to several months. This is the time when patience is a virtue.
5. When your offer has been accepted, the bank gives you a time-frame to close the contract or it will become null and void. This is the time to perform a home inspection and determine the extent of repairs that may be needed. This needs to be factored into your investment criteria. Again, and investment savvy realtor will be invaluable.
Keep in mind that the most important thing you should do when buying a home sold short is to hire an experienced real estate agent with thorough knowledge when it comes to both short sales and the investment buyer. Since the process can take a while, you should continue to look at other homes to satisfy your investment needs.
Remember that unlike traditional sales, a low-ball offer is not recommended, however, a savvy investment realtor can put together a short sale offer package that may be able to convince the lendor to approve your offer. An experienced realtor can quickly inform you if the home is priced in accordance with your needs.
Which brings us back to “Should I Buy a Short Sale?”