Making a purchase offer on a house can feel tricky but making an offer on a short sale is even more so. A short sale home, otherwise known as a quick sale property, is the sale of a home for less than the amount that is owed on the mortgage. This is often a measure that is taken when the homeowner is faced with a foreclosure. With a short sale home to get rid of, the seller is very motivated to make a deal. Still, the offer must be approved both by the seller and lender
There is no one rule for how much you should put down with your purchase offer. Some people will put down $1,000, but any amount between one percent and five percent of the price of the home makes a huge difference and relays that the buyer is serious about the property. A real estate contract will usually request an earnest money deposit such as this to be put in a trust account. This will offer protection both to the seller and buyer if something happens and the sale goes flat.
Look for Comparable Sales
It can be difficult to know how much to offer for short sale real estate. You can get a good idea by first looking at the other homes on the market in the same area to see how much they are asking for the property.
Refrain From Asking for Repairs and Special Reports
If you ask the seller to pay for any inspections, it will lower the bottom line for the lender. The lowest offers are the ones that are not typically accepted. You shouldn’t ask the seller to pay for home warranty plans, roof certifications of pest inspections. Even if you think you’ll need to make big repairs, don’t attempt to negotiate with the seller.
Allow the Bank Plenty of Time
Though you might get good news on the sale within a month, a lot of lenders can take six to eight weeks or longer to reject or approve the short sale process. Allow two or three months and always be ready to go immediately if they approve sooner.
Tell the Seller You’re Patient
The largest issue encountered with short sale sellers and their agents is that buyers will often walk away. They may feel daunted by the entire approval process for any other reason. Show your good faith by telling the homeowner you’re in no rush and will wait around for the next step.
Offer To Take Care of Seller Fees
If there are any closing costs that the seller is usually responsible for in a short sale, the lender usually covers them. If you instead agree to pay part of it, it will help to win over the seller.
Lessen the Inspection Period
With a standard purchase contract, you as the buyer have a specific time frame to have the inspections completed. The home essentially remains off the market while the buyer takes care of it, though the sale won’t be considered a solid one until that period has passed. Don’t skip out on getting the home inspected but try to get it done within a period of 10 to 14 days, as it will look better to the buyer.
Submit a Substantial Pre-Approval letter
Few things will make you stand out more than having a pre-approval letter from a lender. One of the things a seller worries about the most is whether or not the buyer is capable financially of closing on the house. The statement in writing will show that you are good for it.
In Conclusion
Usually, short sale homes are priced much lower in order to attract various offers. Investors will therefore need to act competitively to make their short sale offer. Understanding the contract is an important place to start, and understanding that most short sales are as-is will save you a lot of unprofessional fumbling and trying to make negotiations that you shouldn’t. You will also need to be patient, as the short sale process can take some time, as mentioned above.
How To Properly Make an offer on a Short Sale Property
To make an offer on a short sale property, you must:
- Make a substantial down payment. This will show that you are serious about buying the home. It will get the bank’s attention as well if you put down between one and three percent of the sale price. You should also have a pre-approval letter ready to go.
- Do your homework. Investors have to do their own work in a short sale, including calling listing agents and checking comparable sales beforehand. Be sure to do your due diligence so that everything is taken care of when the lender approves the short sale. This will allow you to act quickly when the time comes.
- Ensure the short sale has been approved by the lender. Before making an offer, it’s important to find out if the short sale has been approved by the lender. Though many houses are listed as short sales, there is no guarantee that the transactions will be treated as such. In a lot of cases, an investor will waste their time on a short sale only to find out it hasn’t been approved by the lender.
- Try not to be too pushy. Because short sales take such a long time to process, it’s important to be patient with the bank, especially when two mortgages are involved, and allow them to do their job. It can take a few weeks to several months to complete the process. If you’re in a big hurry, going after a short sale home probably isn’t in your best interest.
While short sale homes have a lot of appeal for both the buyer and seller, they can take a lot of time from start to finish, and there may be many more roadblocks to deal with during the sale. Because of this, you should prepare yourself for a lengthy wait time. The fees will have to be dealt with, as well any other issues that may arise in the meantime with the
