Buying a short sale-Short sales for buyers-

Buying a short sale-Short sales for buyers-

Are you being encouraged to avoid short sale listings? Do you feel like you are missing out on good deals or beautiful homes that really appeal to you? Or, are you FHA approved and nobody is accepting your offers because you simply can’t compete with cash or higher down payments?

It may be time for you to re-think short sales! A year or two ago I might have said the same thing, avoid short sales… at least until they are approved. My thoughts on short sales have changed and yours should too, especially if you are competing with an FHA loan against other buyers who have larger down payments or all cash.

Why not go where others fear to tread! While others are flocking to the “perfect deal” you can be getting your foot in the door of a home that meets your needs at a great price…if your patient.

The reason your agent is not showing you these homes is because they don’t know how to handle them. What a mistake! I’m here to tell you through experience that you can buy a short sale if you have the patients and don’t give up! That doesn’t mean you should stop looking at traditional sales and foreclosures, it just means to broaden your search horizons!

Quickly let’s review what a short sale is: When a seller must sell their home for less than they owe on the property, and the lenders that they owe the money to agrees to take less than they originally loaned, that is a short sale.

For example: Let’s say Joe Seller Owes $400K on his home and he must sell. But, now the market dictates that his home is only worth $300K. The only way for Joe to get rid of his home is to find a buyer at the new market value of $300K, and get the bank he owes the original $400K, to “forgive” the $100K. That $100K negative difference is the “short” of the sale.

So how does this affect you the buyer if you are interested in such a home? Often these homes are listed below current market value to attract offers quickly. So you could potentially purchase a home below market value. But moreover, because these transactions take longer than the typical sale it turns many buyers off. But not you! You are patient and not in a hurry!

Things to keep in mind when purchasing a short sale:

• The process can take on average 45-60 days, sometimes longer.
• The bank may counter your initial offer, but usually well within market value, often less.
• Your agent MUST be an expert at the short sale process. This is important because they must understand if the seller and their agent know what they’re doing in order avoid wasting your time and energy.

The bottom line here is don’t miss another bargain “Short Sale” property because you found out too late or you were discouraged from seeing it! Sometimes as first time buyers you will have to think "out of the box" to be competitive with other buyers, especially with inventory is low or you have a lower down payment.