If you are wondering what it takes to successfully obtain a home through a short sale, here are some tips. We’ve had quite a bit of short sales and foreclosures in the St. George, Utah real estate market – hope this helps!
1. Decide with your Realtor’s help what price to offer. Take into consideration the original amount of the loan, how old that loan is, what part of that unpaid balance may be covered by mortgage insurance. Have your Realtor obtain recent sold comparables in the area. Also, ask your Realtor to obtain the listing history of the subject property. After looking at all the details decide what price the bank may accept. According to the National Association of Realtors, 80% of the offers made on short sale properties are not accepted. This may be due to buyers and their agents not doing enough research to come up with a price close to what the lien holder will accept.
2. Include in your Real Estate Purchase Contract an “AS IS” Addendum. The thinking here is that the lien holder is not going to allow any funds to be paid out to accomplish any repairs on the property (the lien holder wants as much of the proceeds as he can possibly get). So you must be willing to accept the property in its current condition.
3. Do your “Due Diligence” on the subject property prior to making an offer. This means getting any inspections done prior to, rather than, after the lien holder approves the sale.
4. Be willing to obtain a Home Warranty on the property at your expense; it is unlikely that the lien holder will be willing to allow the seller to pay this expense, and it is well worth the cost.
5. Give your Realtor a letter from your lender if you are going to finance part of the purchase price of the property. This letter should state more than the fact that you are credit approved. The lien holder is going to want to make sure that you have already supplied your lender with all of the documentation necessary to make the loan; it should also state any unmet conditions for making you the loan, such as an appraisal of the property and a commitment for title insurance. This letter should be submitted with the contract.
6. Follow any other advice that your real estate agent offers. There are wonderful opportunities out there and a good Realtor can make all the difference in helping you through this type of transaction. Good Luck.
