Foreclosure How To Buy

Buying A Home - Learn These Short Sale Tips Before You Buy One

If you’re in the market for a home, most likely your agent has mentioned the term “short sale” on a home. A home being sold as a short sale depicts a situation where a seller facing money problems is trying to avoid foreclosure by selling the property for below the outstanding mortgage balance. It’s not uncommon to find a seller in this situation with a defaulted home loan.

Don’t be fooled by the low market price of a home in this situation since they aren’t always the best financial deal. The seller could have bought the home at the high point of the cycle and paid more than they should have, or the current real estate market may have forced property values to take a nose dive. As a homebuyer, you also need to be aware of extra costs not included in the properties selling price.

One big problem you face in a short sale is having to wait patiently for the lender to accept your offer, especially since they’re taking a loss on the property. The lender must weigh the benefits of accepting your offer versus continuing to let the property go to foreclosure.

This process could drag on for several months with no guarantee the lender will take your deal, especially if the property has been listed and marketed at an unreasonably low price far below the outstanding balance.

After considering all the possible disadvantages you still want to continue pursuing the options of purchasing this type of property, make sure you hire a Realtor with short sale experience. If your agent is professional, he or she will take the time to research what’s owed on the property so you’ll know how much you want to offer. If your offer is too low, most likely the bank will reject your offer.

Your agent also needs to investigate if there are multiple loans against the property. If additional ones exist, your agent will need the cooperation of all lenders to approve the deal. The more lenders involved, the less likely your deal will be approved since most lenders won’t forfeit their interest in the property without some compensation to make up for their losses. To find out if multiple lenders exist, just have your agent pull the deed to the property.

Another important point is to ask your agent to find out from the seller’s agent what legwork has already been completed. Lenders will only consider a short sale situation if a seller is going through difficult financial issues. Although the fact remains a bank has the final approval, you want to verify the seller has tried to contact the bank and confirmed they will accept a short sale. Unless you can afford to wait, you don’t want to waste valuable time waiting for bank approval on an offer you’re pretty sure will be rejected.

Are you searching out Irvine homes for sale? Use these local Irvine Realtors to help you locate one.

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