Understanding Short Sales
As you might have heard, home owners have, and still are defaulting on their mortgages and losing their homes. In order to avoid foreclosure many have exercised their option of a short sale. A short sale means that the seller's lender is willing to accept a discounted payoff to release an existing mortgage. This entire process is dependent upon the hope that the lender/bank will take a loss, approve the sale and eliminate the expense of foreclosing, clearing and reselling a home.
Short sales are tricky in the sense that many parties play a part in accepting the final offer on a home. Typically, short sale home prices are set by the seller and agent, not the lender/bank. Because of this, sellers and agents may advertise a low short sale price. Unfortunately, this price is insignificant because the lender/bank ultimately has the final say. This is why it is important to work with Greatwall on obtaining information about the property and lending situation prior to making an offer.
Peruse Public Records
Do your homework before pursuing a short sale home. Review the remaining balance the seller owes and the amount of loans owned by lenders/banks. If the seller has loans owned by two different banks it will be a lot more difficult to approve the short sale.
As mentioned earlier, the success of the sale solely depends on the cooperation of the lender involved. Work with Greatwall and your local realtor to uncover the average cost of similar homes in the area, the names of those in the loan title, whether a foreclosure notice has been filed and how much is owed to the lender(s). Knowing the seller's story is great bargaining ammunition to have at hand when you are ready to make an offer.
Keep Your Options Open
Don't get too attached to a property, keep your options open and continue to actively look at multiple properties. It is crucial to stay optimistic and well informed when shopping short sale homes. Contact us directly by calling 469-916-5272 (for mortgage), 469-916-5274 (for real estate) and arm yourself with the information you need to make an educated short sale offer.
Presenting Your Offer
When it comes to making a short sale offer, knowledge is power. Before presenting your offer to the seller, make sure they are aware of the lender's short sale approval requirements. Once you've been accepted by the seller, submit documentation and your purchase offer to the lender(s). Remember, though the seller gave you the go ahead, the lender(s) may not.
When submitting your offer to the lender, be optimistic and include a copy of your earnest money deposit. This will let the lender(s) know you are financially stable and serious about the property. In addition to the deposit, the lender(s) will want to ensure you are pre-approved for a loan. Have your Greatwall mortgage professional prepare a pre-approval letter along with a list of comparable sales in the area that supports the price you're offering to pay for the home.
Lender Deadlines
There is nothing “short” about a short sale; very few close in 30 days or less. In order to have some say in the process, make your offer contingent upon the lender's acceptance. Supply the lender with a reasonable time frame to respond to your offer, after which, you'd be free to cancel. Some lenders are required to submit the offer to a large committee, but most are able to respond to an offer within 30 days as long as your offer is put into the decision maker's hands. Be sure to collect the appropriate lender contact and never send an offer blindly.
Conduct Inspections on Your Own Dollar
Almost all short sale properties are sold as is. Repairs are seldom done, credit is more frequent. You, the buyer will be responsible for all home inspections and may want to consider making your offer contingent on their approval.
Also, keep in mind that you, the buyer, may be required to take care of any repairs in order to be approved for your loan. Get a head start by contacting Greatwall to determine whether or not you'll be required to make any adjustments to the short sale property before being approved.
Close on Time
Once all is approved, be prepared to close on escrow on the scheduled date, exceptions are rarely made. By taking care of all the loan paperwork immediately after filing for escrow you can ensure everything is prepared a day or two before the closing date. Work closely with your Greatwall mortgage specialist to avoid missing any crucial deadlines.
