With the recession in the housing market, millions of American homeowners are facing the loss of equity in their houses. When a homeowner needs to sell her house and the equity she is built up sums to less than that which she owes her mortgage company, with approval from the company, she’ll participate in what is called a short sale. Unlike a foreclosure, in which the creditor repossesses the house, a short sale borrower stays in the house although it is marketed in the traditional method. If a buyer makes an offer, the creditor selects whether to take the deal. This may be a long, slow process.
Contact a mortgage broker or other creditor to get pre-approved for financing. You will be purchasing the home from a bank and it is necessary that the bank’s representatives understand your offer to buy the residence is backed by a commitment from a lender to loan you the cash for your home.
Determine how much you will offer on the house. Consider recent sales in the area and compare the house that you want to buy to people. The cost should be the same as people close by, or slightly higher or lower, based on location, size, age, status and amenities.
Locate a real estate agent experienced with short sales. It costs you nothing, as a purchaser, to hire a realtor, as all commissions are paid by the seller or, in the case of the short sale, the creditor. Don’t sign a buyer’s brokerage agreement as it may bind you to pay any shortfall in commission the creditor refuses to pay. You might even work together with the listing agent if you feel comfortable doing this.
Ask the broker to structure your deal to buy. Loss mitigators in mortgage companies and banks are drawn to what are called”blank” offers. These are supplies from pre-approved buyers that contain couple contingencies (“I shall buy this house if…”). Since most short sale houses are offered”as-is,” one contingency to add in the contract is a home inspection clause saying your offer to buy is contingent upon an acceptable home review.
Ask your realtor to compile a listing of the similar properties you used to determine the price you are willing to pay and send it together with the deal, if you are providing substantially less than the listing price.
Wait for an answer from the bank. This can take months or weeks, which is stressful for both the purchaser and the vendor.