A short sale can be a great way for patient buyers to save money on a house, while also offering economic relief to overburdened homeowners who don’t want to foreclose on their home. But short sales offer low approval rates– only two in five according to the National Association of Realtors– and can take many months and lots of negotiating.
If you’re considering making a bid on a short sale home, make sure you understand how the process works and what the risks are before diving in. Here are three tips to help improve your chances for a successful purchase.
- Have a Good Attorney Behind You: An experienced real estate attorney is really quite priceless in complicated sales transactions such as short sales.An attorney will be able to work with a title company to make sure the title of the property is clean. There may be additional liens on a home that you can’t be aware of without a title search. Real estate attorneys are accustomed to working with title companies to ensure that their clients are protected from unknowingly taking on debt from the previous owners.Your attorney will also be able to negotiate terms of purchase with the seller and their lender, and can give you council as to if they think a short sale will be approved and if the purchase is wise. Attorneys help improve the odds of a short sale going through.
- Be in the Best Position to Buy: You can increase the likelihood of your short sale succeeding. The ideal short -sale buyer pays in cash. But since that’s not possible for many people, potential buyers should still work hard to look good to the seller’s lending institution.You should make sure you are preapproved by your own lender before you make a bid, and you should have as large a down payment as you can possible muster. Furthermore, a seller’s bank will be much more likely to work with you if you have no contingencies, such as the need to sell another house first or rigid timelines about when you need to close the deal.
- If at First You Don’t Succeed: You’ll have to try again. No matter how well qualified of a buyer you are or how skillful your attorney is, sometimes short sales just don’t happen. The seller’s lender and the seller may disagree on terms of the sale, or you may find the negotiated terms of the lender (that happen after you’ve negotiated with the seller) are unacceptable to you. If one short sale doesn’t work out, you can always try again. A good realtor and real estate attorney can greatly aid in this process.
Short-sales can be beneficial for all parties involved. To make sure you’re part of a successful short-sale, be prepared with a good real estate attorney, a preapproval, and the knowledge your short-sale might not work out despite your best efforts. If you are successful in your purchase, you’ll know that your savings were hard-earned and well-rewarded.