Tips to Consider When Making an Offer on a Short Sale Property
Short sales are extremely popular, especially with buyers seeking to purchase property solely based on a reduced price. Price is a huge consideration when purchasing a home and purchasing one at a below market value can provide tremendous savings. As a result, there is a lot of competition when seeking out a short sale. The process of purchasing a short sale is not easy as not only is it competitive to find one, the process to close requires several factors. If you are purchasing a short sale property, consider the following:
A short sale is when a property is priced lower than the financing owed on the property and the lien holder, typically a bank, is willing to allow the sale to occur despite the price deficit. The buyer receives the property at a favorable price and either the seller handles the deficit, or the bank forgives the debt.
Approved or Unapproved. Many times a property is listed at a favorable price, and the description will note whether the property is a short sale. It is important to pay attention to if the property is an approved or unapproved property.
- An approved short sale means that the bank has agreed to allow a sale to occur at the lower price.
- Many times if a property is unapproved offers are contingent upon the approval of the bank. Offers placed on a short sale that have not been approved can be a big waste of time.
Patience. A short sale requires patience. Numerous variables are at play when purchasing a short sale, and the process can be time-consuming. Once a solid offer is presented, it may also take longer than usual to have it accepted. Not only must the seller accept the offer, the lienholder must also approve it to facilitate the sale. Knowing that there are several steps involved in the process is essential. At the same time, with a little patience you may end up with a great property and at a terrific price.
“Cash is King.” In a short sale situation, the lenders are taking a loss on the original loan. It is more favorable in this situation not to have too many variables to be involved. If you were to offer cash, it would in most cases, gain the attention of the lender. Another benefit of offering cash is it allows for less time needed to close the deal. Most importantly, in the event of a short sale, cash offers to move properties much faster.
These tips will prove useful when considering the purchase of a short sale property. It is always best to anticipate what to expect and how the process will unfold when working with short sales properties. Working with a real estate professional is always in your best benefit as they will guide you every step of the way to acquire short sale real estate.