What You Need To Know When Buying A Short Sale Home

If you are a buyer, and trying to buy a property in today’s market, most likely you will come across the properties that are sold as Short Sales. Here are a few things you need to know and to have before applying for a Short Sale.

1). You need to be flexible with time. If you need to move in ASAP, Short Sale transactions are not for you. In today’s market it might take 2-3 months for the banks to approve the Short Sale (sometimes even more – depends from the bank and/or investor).

2). You might need to come in with additional $2,000 or $3,000 dollars in addition to your original offer, to make transaction go through. Sometimes the first lien holder (bank of investor who holds the 1st Trust Deed) will not pay enough to the 2nd Trust Deed holder, or there is per diem charge. Be ready to step in and cover that difference. The sellers usually will not pay that amount as they are not receiving any money from the sale. You as a buyer are purchasing the property 10%-15% below the market price, so when the time comes – you might need to make a business decision.

3). The properties are usually come “as is.” Neither the banks nor the sellers will make repairs on the property. All the inspections are usually made just for information purposes only, and there might be no contingency for the home inspection.

4). The banks usually do not approve the closing fees paid to the buyer, and they do not provide Home Warranty Plan either. Be ready to buy the plan by yourself, after the transaction is finished, or include the plan into your closing costs.

5). You will have to be ready to deposit the Earnest Money Deposit to the Escrow right away (prior to receiving the Short Sale Approval from the banks), showing the listing agent that you are willing to wait for the Approval, and will not switch to another property. There is nothing worse for the listing agent than working hard on the Short Sale transaction for 2-3 months just to find out that the buyer will walk away at the last minute, because they changed their minds. Don’t be one of those buyers! Treat others like you would like to be treated. If you are not sure about the property simply do not apply. Let the people who really want the property to be the one who get it.

6). Be prepared when submitting the offer to the listing agent. With the offer send the following items:
a. Pre-approval letter (must be from the direct lender)
b. First page of the credit report with FICO scores
c. Copy of the Earnest Money Deposit 2%-3% of the purchase price
d. Proof of funds (copy of your checking or saving account showing the amount needed for the down payment and closing costs).

7). Have your agent to follow up with the listing agent every week. Sometimes the listing agent has 20-30 properties and they just simply do not have time to call every agent who represents buyer. Remember there might be multiple offers. Don’t blame anyone for anything. Always be polite and have a positive attitude. Being rude and blaming someone will not get you anywhere. Remember everyone is working hard in order for you to buy the property under the market value.

8). If you receive any documents during the Short Sale transaction from Escrow or the listing agent, make sure that you read them, sign them and return the documents ASAP.

9). Do as much work on your loan as possible. Always give to your loan officer updated information (paychecks, W-2s, checking and saving accounts info, etc.); sometimes you will have to close as soon as possible.

10). Stay motivated and make sure that the listing agent knows what he or she is doing. Have your REALTOR interview the listing agent about Short Sales to determine if the listing agent is knowledgeable in Short Sale transactions. It is wise to think about this detail before applying for a particular Short Sale property.

Hope this will help you in the future. Meanwhile if you have any questions, you can reach me at ihorpochay@hotmail.com. Feel free to contact me at (562) 334-7393 if you need to sell or buy a property.

Sincerely,

Ihor Pochay
Realtor / Short Sale Specialist
Tarbell, Realtors
Cell: (562)334-7393
Off: (909)629-6186 Ext. 339
Fax: (909)629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogger.com