Here’s some tips on buying Short Sales:
Having been involved in the process of working with the selling agent, seller, and bank, is taxing enough. There is nothing short about short sales.
One thing to consider when looking at short sales, is to find a agent with the proper training in buying short sales and foreclosures, and other types of distressed properties. One such realtor is Tom Davis with Coldwell Banker in Arcadia.
tomdavis@coldwellbanker.com
(626) 921-6449
Davis went to a 14 hour intensive training on short sales and foreclosures. One of 35,000 realtors nationwide who are CDPE trained.
1. Consider it a learning experience- the process is both time consuming and can be emotionally draining as the process is prolonged as there are so many more steps involved.
2. Buying a short sale is not for everyone, usually the house is “as is” you really don’t get much history on the home and will have to do lots of research on the home on your own.
3. Be diligent about checking everything out, water leaks, roof, foundation, electrical.
4. Consider it a learning experience f, but very alarming that
5. A seller can actually list a home for sale without bank approval.
Note to banks, regulators, etc..: This is a bait and switch tactic and really no home should be listed as a short sale without being approved by the bank.
6. Even if your short sale offer is accepted, the banks will usually ask you to buy the home as-is and won’t pay for any repairs discovered by an inspection.
7. Just make sure there is a time limit on your offer. Usually that’s thirty days. You never know what’s going to happen with short sales, but put your offer in, then forget about it and keep looking. Even after the time limit has passed, they’ll review your offer and contact you to see if you’re still interested. My Realtor had me putting in several offers at the same time. (You won’t get stuck buying two houses–you can always weasel out of a deal you don’t want, but the chances are very slim that two offers will be accepted at the same time.) Unless this is your dream house, the best house you’ve ever seen and no other house will do, don’t count on getting it, but put the offer in and keep looking.
8. The banks are overwhelmed, out of touch with neighborhood info, and GREEDY. that’s why they’re bankers! meanwhile, they lose money every day the prop goes unsold.
9. The California Association of Realtors has a standard boilerplate short-sale addendum to add to the residential sales contract boilerplate, in which you can specify (among other things) when escrow starts and when your contingency period starts, relative to when (if) your accepted contract is approved by the seller’s lender(s). Check the boxes that say these two things don’t start until after lender approval of the sale.
Then if you find a nice property 2 weeks later while still waiting to hear from the bank, you simply make that offer, and if it’s accepted, you cancel the other. Or, if the other property is also a short sale, you don’t cancel either one until one of them gets approved or you you get an offer accepted on a non-short sale. You’re not out any earnest money, because you don’t put any down (or get an appraisal or do inspections) until the bank approves the sale.
10. Get a good home inspection, a referral for someone who has excellent references. It is key when buying a short sale as most are in as is condition.
11. Call the Gas Co, and request a safety inspection before purchasing any home including a short sale.
12. Talk to the neighbors and lookup the property address to see what you can find out about the property, you will be amazed what you can find out.
Here’s a quote from someone online
“Short sales are like nuclear war. The only winning move is to not to get involved in one. I’m sticking to the REOs.”
To learn more about short sales, here’s some helpful information from a Home Buying Guide :
- Read the Home Buying Guide page on purchasing a short sale home.
- Forums post on the problems with using VA and FHA loans to finance a short sale.
- Forums post on short sales negotiations.
