What to Expect when you are expecting to buy a short sale
So, you are expecting? Expecting to buy a short sale? Short sales are handled much differently from traditional sales. Here we will go over the differences to help you through the process.
The first thing to consider: Your time frame for purchase
Do you have enough time to wait for an answer? Short sales can take 30-60 days to receive an answer. We've heard horror stories of it taking 5-6 months in some cases as well. This could have been due to a number of factors that we cannot thoroughly cover here.
The next thing to consider: Choosing a Real Estate Agent
Have you found a real estate agent who has the knowledge to guide you through the short sale process? Ask them questions like "have you helped a buyer purchase a short sale before?" if so, ‘how did the process go?" Then ask, "Have you ever negotiated a short sale for a seller before?" and if so, "how did that process go?"
Watch for the agents' opinion of short sales. If an agent has had a bad experience with a short sale you'll be able to pick up on that. If they feel like they are a waste of time you'll notice that too. Then you need to find someone who understands the process and can help you through it.
Next thing you'll do: View the homes
Next your agent will schedule appointments to show you the short sales you are interested in. While you are viewing these properties, take note of the condition of the property. How long ago did the seller stop maintaining the property or is it still being maintained? If there are tenants living there - when does their lease expire? Are they willing to stay or do they plan to leave? Are they keeping the house or property neat? Or are they destroying it?
Ready to Submit an Offer: Make sure it is written up correctly
Your agent should of course called the listing agent to determine the status of the short sale. Does the seller plan to accept 1 offer or many? Have any offers already been submitted? If so, what was the outcome? Was there a previous bank approval? What were those terms? Does the seller plan to sign an offer and then take the property off of the market or do they intend to keep it available for sale?
Your offer will consist of the following:
Far/Bar As-Is Contract: This is an approved as-is contract. It does not require for the seller to be responsible for any repairs. It does give the buyer the right to inspect.
Short Sale Addendum: This form spells out the timeframes. You can give any number of days for the seller to obtain bank approval. You can make the offer's effective date good from the time of acceptance by the seller or from the time of receipt of written approval from the bank. We advise the latter as to not lose money with inspections without knowing the outcome of your offer.
Approval letter if financing: This is a letter from your lender approving your financing.
Or
Proof of Funds if paying with cash: This can be a letter from your bank stating "Mrs. Buyer has adequate funds available to close on said property for $this much money" or it can be a copy of a bank statement.
Earnest Deposit: Typically at least $1,000. The seller's lender will want proof of this so go ahead and have it ready. It shouldn't matter who is holding the escrow but if the seller is already working with a specific local title company it is best to have it placed there.
Seller Acceptance:
Seller acceptance shouldn't take more than a day or two in most cases. Remember though, the seller is only agreeing to sell the property if their lender agrees to a short sale. It is critical that you have a contract signed with the seller. Otherwise there is no deal.
Then you: WAIT for seller's lender's approval
Determine how often you'll get updates. Do you want to know what is going on every week? Only when there is progress? Do you want to be called? Emailed? Communication is key. You and your agent should have a plan.
GREAT NEWS: Approval
Now your effective date starts. This means that your inspection period starts, your loan approval period starts. Make sure you work diligently on your financing because asking for an extension can be a real headache.
At Closing: One extra form
Most banks are now requiring the buyer to sign an affidavit of arms length transaction. This ensures that nothing funny is going on. (like you are buying mom's house). Some banks are even doing background checks on buyers to verify this as well. Otherwise your closing will be handled like any other real estate closing.
There you have it, What to Expect When you are Expecting - To Buy a short sale.
Keep in mind that this is not a full list of what could happen but it is a generalization to help you with the process. If you are considering a short sale purchase in Lee County please contact our team for help. We have the experience to advise you when a short sale can work and how to handle the transaction - start to finish.
We look forward to your successful purchase.
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Yours in Success,
Susan Milner
Florida Future Realty, Inc.
239-542-8521
Copyright 2008
