How to buy a short sale

Have you been looking at homes and avoiding short sales? Or perhaps, you've pursued a short sale, only to get beat out by another buyer's offer? Or maybe, your offer was submitted and for some reason the short sale did not get approved or the seller backed out? We had a seller declare bankruptcy a day before we were supposed to close last year and stop the short sale. That may have been a good decision for the seller, but I'm sure you can imagine the frustration and monetary loss to the buyer.

Any way you dice it, the current process for buying (and selling) a short sale is not for the faint of heart . I typically write about how the system can be easily improved, saving everyone time and money, and leading us to a faster recovery. But as the saying goes, it is what it is, so let's talk about how to buy a short sale under the current process.

Here is what I look when recommending to a seller which buyer to select for their short sale:

1. Pre-approved from a direct lender. The most important quality in any buyer is their ability to close! Naturally, cash is wonderful, but not realistic for most short sale buyers.

2. Committed to the house. While we'd like to make buyers promise to stop looking at other houses, the reality is that most people will continue to look. It's a lot like dating without a ring. So instead, I look for a buyer who absolutely LOVES the house. Next week a better deal may come on the market, but if a buyer (or buyer's agent) can convince me that this is the house they really WANT, then that's a huge plus.

3. Educated. Short sales require a ton of patience. An educated buyer understands the short sale process and understands that it could take two to six months before you even open escrow.

4. Well represented. We love working with great agents who represent their clients well. The agent matters. Choose a good one, listen to their advice and give them the same loyalty they have extended you throughout the process. Some buyers like to work only with listing agents, jumping from one agent to the next, thinking they will get the inside tract and a better deal. Frankly, I prefer buyers who are committed to both the house and their own agent.

5. Flexible. The key phrase in a short sale is "subject to lender approval". While buyer and seller may have agreed to the price, concessions and allocation of costs, the lender(s) makes the final decision. It's very common for the lender to ask for a higher price, disallow repairs, disallow concessions or require a cash contribution to pay off the second lien holder. Both buyer and seller must remain flexible and open to the lender's terms of acceptance.

So ... is it all worth it? Yes. Short sales make up such a large percentage of our inventory that it just makes good sense to consider them. Good success with your housing search,

Seven Gables Real Estate

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