Buying a Short Sale Home

Should you consider a short sale?

Buying a home that is going through the short sale process, if you have the time to commit to it, can get you a great home at a great value. The key is do you have the time? It’s not a quick process but like I said if you have the time you could end up with a great home at a great price.

What you need to consider.

Buying a home going through the Short sale process can take as little as 45 days or as long as 9 months or longer. What’s the difference in time frame? I’m glad you asked. The difference is, has the home gone through the approval process with the lien holder. Typically the lien holder does not even begin to look at the file on a short sale until the home has a buyer contract offer on it. Therein lies the problem and trust me I could go on and on about the banks processes but that would do neither of us any good. The banks establish their procedures and we just get to figure out how to maneuver it and work it to our best advantage.

Part of the problem too is there is not one process. Every bank has their own list of procedures they follow. Now before I discourage you let me say that I am only telling you the buyer this so that you understand what’s going on with these Short Sales. Most of this means nothing to you, except to let you know that buying a short sale is a diligent process and not for the faint at heart. So if you have the time and the patience for it. I say let’s go for it. The difference in this long process and why I think it really pays off for the diligent buyer is, we get to put offers in on as many homes as we find that you like.

That happens because of one line in the Washington Short sale agreement that states,

“Buyer may __ may not__ give notice to terminate this Agreement at any time prior to delivery of lender consent. If Buyer terminates this Agreement, the Earnest Money, if deposited shall be refunded to Buyer”.

Things to watch out for

Now be careful here because there are some listing agents out there and I know who they are, who try to lock the buyer into the Short Sale contract by forcing the buyer to check “may not” on this clause and requiring that the buyer deposit the earnest money right away. If you try to back out of the contract they find you in default of the contract and do not release your earnest money. I have never had this happen to a buyer because I strongly advise my clients not to enter into such ridiculous agreements that favor everyone but them.

The terms we use are important

The terms of the agreement that I will write will state that all home inspections, financing and earnest money requirements will not kick in until we have received lender consent and have established mutual acceptance.

Mutual acceptance means we have received the lien holder’s offer, which is really a counter of our original offer. If we decide that we can agree to the lien holder’s price (which may or may not be the same as our original offer) and conditions we sign off on them and have Mutual acceptance. We then deposit earnest money and move to home inspection and the financing contingency. Don’t forgot about the importance of the Home Inspection.

Now, if the home you are looking at has went through this approval process by the lien holder already because a buyer previous to you put in an offer but then backed out on it, we then have a much shorter process. So you can look for only properties like this and there are a few out there if you want to shorten the process but a good rule of thumb on these is give yourself at least 90 days.

If everyone just put in an offer on a short sale when they were purchasing properties we would greatly shorten the process but I digress…. The banks could also start the process earlier but I am told they have stacks of them on the desk and only get to them when a purchase and sale shows up. Waaah I feel so sorry for them. Oops I’m still digressing.

So, I stated in the beginning that you could get a home at a great value. Why is that you ask? Well here is the answer. Homes on the short sale market are continually reduced in price to bring in more offers and these price reductions go on until offers start rolling in. Or sometimes the home is just listed right away at a bargain basement price. We are in a buyer’s market as any one that has not been in a cave for the last 3 years knows, so buyers want bargains and the homes don’t start getting offers until it looks like a bargain. But not everyone has the time to purchase a short sale so if you do, you win!

And if you want to get started looking for your great Short sale home contact me . I certainly have not covered everything with this so if you have more questions just post them here.

My Best,

Vanessa

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