If you’re thinking about buying a home, you have other options aside from buying a traditional home sale, such as a foreclosure. Another type of home listing that you might come across during your search is a pre-foreclosure, which is usually referred to as a short sale. When homeowners fall behind on mortgage payments, many will turn to short sale as a way to avoid foreclosure. Just like with a foreclosure, a short sale home can be a great way to save money on a home purchase, and can make your dream home affordable. Although you can definitely get a lot more bang for your buck, buying a short sale isn’t usually an easy process, and it can be time-consuming.
If you’ve already considered both the benefits and disadvantages of purchasing a short sale and you’ve decided that you’re up for the challenge, the following tips can help you with finding and purchasing a short sale home:
Get preapproved for your mortgage
Because short sale properties are usually priced well below market value, a particular home that you’ve got your eye on will likely grab the attention of other homebuyers, too. If you can, offer to make your purchase in cash so that you’ll have an edge over the competition. But if this isn’t feasible, you’ll at least want to be prepared by getting preapproved for your mortgage before you even begin the house hunting process. This way, if you come across a short sale home that’s perfect for you, you can confidently make an offer based on the home loan amount you were preapproved for. Additionally, banks and real estate agents prefer to work with homebuyers who are already preapproved for their home loan. By making an offer before getting preapproved, you’ll need to proceed to this step anyway before your offer is even seriously considered. By then, it could be too late and somebody else’s offer could get accepted.
Finding short sale homes
Getting the financing figured out is your first step, and now it’s time to actually find short sale homes in your area. The Internet is a great place to start, and many popular home listing websites make it easy to sort through listings by showing what short sale properties are available in the area. Because buying a short sale home can be a complex process as it is, you might want to consider narrowing down your search even further by eliminating homes that were financed with two separate home loans, especially if they’re from separate banks. A short sale home that is financed this way can make the process much more complicated and time-consuming.
Work with a local real estate agent
In addition to looking online yourself, you’ll also want to enlist the help of a local real estate agent in your area, and ideally one who specializes in or is experienced with short sale homes. By working with a real estate agent who is familiar with these types of transactions, you might be able to learn about new short sale homes right as they hit the market and before they’re even listed online.
Look at comparable homes in the area
Although short sales can be a hassle, they’re usually well worth the extra work because of the great deal you’re getting. However, not all short sales are bargains, and before you go through the trouble of dealing with a short sale, you’ll want to ensure it’s worth it first. Compare similar homes in the area to make sure that you would, in fact, be getting a good deal by making an offer on a short sale that caught your attention. If it doesn’t seem worth it, either move on or make an offer.
Make an offer
Once you’ve decided that you found the short sale you want to buy, it’s time to make an offer. This part can be tricky because your offer will need to be accepted by the bank that owns the home. And because you probably won’t be the only person making an offer on the same property, you need to make your offer competitive; your real estate agent can help you with this.
The waiting period
One of the hardest parts about purchasing a short sale can be waiting to hear back about your offer. As such, remember that short sale properties are usually not the best idea for those in a rush to buy a home. If you’re thinking about buying a short sale, you’ll need plan accordingly as it’s not unusual for it to take a few months to hear back from the bank. You’ll also need to be prepared that after the long wait, your offer is not accepted.
Do you need money to buy a home? If you’re receiving annuity payments, contact Peachtree Financial Solutions today to learn more about selling future payments for a lump sum of cash.
Nothing above is meant to provide financial or tax advice. You should meet with appropriate professionals for such services.