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How to Buy a Short Sale

Published by julia | Filed under Buyer / Seller Tips, Miscellaneous, Real Estate

With the current foreclosure crisis and rough economy going on out there, there are plenty of people who are in need of a quick sale on their house. They’re behind on their mortgage payments, the bank is harassing them about getting its money, and there’s no way they can make up the back payments. Even if they get an offer on the house, should they decide to sell it, it may not be enough to cover what they owe on it. However, this does not mean they can’t sell the house. They can get permission from their bank to do what is known as a short sale.

A short sale is when a homeowner sells his or her house for less than what he or she owes on it, and the bank accepts this smaller payment as payment in full. It affects their credit in a slightly negative way, but not nearly as much as if they went into foreclosure. More and more banks are willing to do short sales these days, thanks to the current state of the economy. This can mean good news for you if you’re in the market to buy a house. Buying a short sale means that you can get a great deal on an excellent property, often getting it for way less than what it’s worth.

When it comes to how to buy a short sale, most of the responsibility to make it happen is one the homeowner, so you really have it easy. If the homeowner is already offering the house as a short sale, then this means that he or she has already obtained permission from the bank to do so, and is advertising at a reduced price in order to attract more buyers. The amount the homeowner is selling at is probably what the bank said to start with, but it doesn’t mean the bank won’t go down if you offer a lower price. Just remember, banks do not want to foreclose. They will take all necessary measures to avoid it. If this means accepting your lowball offer just to avoid having to take possession of the house, then so be it.

You may also find a house that is on the brink of foreclosure and offer a price less than what the house is worth. If the owners choose to accept it, then they must bring it to their bank for approval. Just remember that in any short sale situation, you’re going to have somewhat of a wait before you can close. This is because there is a lot of paperwork involved in a sale like this (most of it on the homeowner’s part), so if you do place an offer, expect to wait a few weeks to a month or more before you can close and move in. The banks have to make sure everything is in line, after all. If the homeowner made even one mistake on his short sale application package, the wait time could be even longer. If you’re a patient person, though, getting a short sale may be just the thing you need to get the house of your dreams at an incredibly low price.