It has become a popular trend for banks to take over homes from overextended homeowners after being foreclosed on. In many cases, these homeowners have no other means of selling their property and have had no choice but to either hand it back or try to sell it themselves, which is where short sales come into play.
Every short sale is different; some are fairly straightforward, and others may require a bit of negotiation to work out.
Here are the basic steps involved with taking over a home that has been offered under short sales by the banks.
Make contact with the homeowner: Reach out to these individuals via phone before visiting them in person. This step is vital as it shows respect and lets them know that you are interested in their home.
Visit the house: Make arrangements to meet or show up at their property, which is when you can ask any questions that may have come up during your phone conversation.
Negotiate: If you still think the home is a good investment, begin to negotiate with them. Find out why they are selling, try to meet their needs, and come up with an agreement that works for both parties.
Get pre-qualified by a bank: Once you’ve agreed on a price with the seller, take it to your bank for pre-qualification. If the bank feels that you can purchase the home, they will give you more details on how much money is needed to close on it.
Close: Once both parties have approved everything, a closing date will be set.
Here are the benefits buyers can enjoy when purchasing short sale listings:
Save Big with Reasonable Offers
With short sales, buyers can feel relatively confident that the offers they make will be accepted because lenders want to work out deals just as much as sellers do.
In some cases, those interested in buying short sales may qualify for special financing options from banks or other lending institutions. This is particularly right of those who have been pre-qualified by their local lender or mortgage broker.
Incentives for Making Repairs
While not every home buyer has the option of performing renovations on a property, those who purchase such listing can request that they receive a break on closing costs if they agree to make repairs.
One of the biggest benefits for buyers in this type of transaction is that they do not need to have their home’s value appraised.
On average, short sales typically take longer than traditional sales to close because there are more hoops to jump through. However, these transactions can be much less complicated for buyers prepared with information about their finances and offer.
Seller May Participate in Closing Costs
In many cases, if a buyer makes an offer through a short sale listing agent or bank representative rather than directly to the seller, the borrower may agree to pay some or all of the closing costs related to the purchase.
Process Is Highly Controlled
Short sales can come with a lot of protection for buyers. Since a third party oversees the process, there’s less risk involved when going through this transaction.
Avoid Foreclosure on Credit Report
Once a foreclosure has been completed, or a deed in lieu has been filed, it can be difficult to remove from someone’s credit report. However, if a listing goes through successfully without being finalized by either of these methods, it will not impact one’s credit standing.
Receive Discounts for Repairs
In some cases, those who purchase short listings get more than just savings on getting their offer accepted. They can also receive discounts for making needed repairs to the property.
Being Listed as a Seller
When someone is planning on buying a short sale listing, there are some cases where they may be able to list themselves as an agent of the seller rather than working with an agent who represents them. This allows buyers to help select the right listing while saving many commission fees that would have been paid to a third-party agent.
The process for buying homes sold as short sales can be much easier than trying to win the favor of an owner who is not in foreclosure. This is because there will typically be multiple offers on someone’s home, and with this type of competition, most buyers should feel like they have the edge in negotiations.
In some cases, those interested in owning such listings may qualify for special financing options from banks or other lending institutions. This is particularly true of those who have been pre-qualified by their local lender or mortgage broker.