Buying a Short Sale Home

Sumo

Most buyers and investors today immediately run to the REO (bank-owned) properties to find a great deal. The reality is, however, that Short Sales can many times be bought at a huge discount, provided you have the patience as a buyer to see the process through. In Alameda and Contra Costa Counties there are a very large number of Short Sale homes for sale, and with that said, there are many very nice move-in ready homes and fixer homes to satisfy most buyers out there.

Some things to remember when buying a short sale that differs from a regular sale from the buyer perspective:

Beware of ultra-low priced homes as your list price is not necessarily the price you will pay for the home. Listing agents understand that the lender won’t consider the seller’s short sale until they have an offer, so they purposely price it way below market value to get a quick offer. The problem becomes, when the seller’s lender does their own appraisal, they will counter your offer at the market value. All of a sudden you are not getting a great deal anymore and you potentially spent months waiting to find that out. A good Buyer’s Agent can help to determine if a property is priced right or what the offer price should be to have the best possibility of lender’s acceptance
Inspections Inspections Inspections! Most short sale homes (as REO homes) are sold As-Is. Meaning what you get is what you see, although CA law still requires full disclosure from the seller as to problematic issues. Buying a Short Sale is different than a regular sale in the sense that you do inspections, but will not be asking for the seller to fix anything nor credit money towards fixing anything. Sellers do not put money into selling their home in a short sale – which makes sense since they are not making any money off the sale. What this means is there can be many more items (visible or not) that will need repair in the near or mid term. Get your home inspections done by a licensed, insured, and reputable provider. We can help with providing professionals to get the right inspections done.
Be Patients, and Realistic! There is nothing short about the Short Sale process. It takes time, and can take a long time, and requires patience on your end. Remember, if you are a buyer and have to move out of your current home within a short period of time and have to move into your next home quickly, you probably want to pass on putting an offer in on a Short Sale. Either that or find intermediate housing for the time being. Selling a home via Short Sale can be emotionally draining on a seller who is most likely already financially drained. Don’t waste your time or theirs if you don’t feel you have several months to wait for the process to close.
Prepare for the Unexpected: There are some cases where a seller’s lender will approve the short sale, but will require a cash contribution from the seller. In many cases, the seller is strapped and cannot pay a portion of or the whole amount. In cases where the seller doesn’t have the capacity to pay, and the seller’s lender will foreclose if that condition is not met, you need to decide if it is worth it for you to cover that cost. Keep this in mind, if the seller’s lender has approved the sale price and you already know you are getting the home at a significant discount off of market value, is it worth coming out of pocket $3K or $5K to see the deal succeed? In many cases the answer is yes, since you cannot find a comparable property on the market for that net purchase price.