These are some steps to avoid short sale pitfalls:
Step 1: Be prepared to purchase and move into your short sale property anywhere from around 3 mo to a year.
- Some buyers are not prepared for the wait when purchase a short sale. Once you put in your offer, everything has to be approved by both buyer, seller and the bank. The banks are faster these days as there are so many short sales, but it’s best to be prepared for the worst. The average time to close on a short sale is 90-120 days.
Step 2: If you need to purchase and move in within around 8 mo, then I would recommend to put in an offer on a short sale that already has an approved sale price from the bank.
- When you put an offer in at a lower price than the bank would accept, they are more likely to negate the offer. It’s best to find out what the bank would accept and put an offer at the that price. Otherwise you might be waiting sometime up to a month just to hear that your offer was rejected from the bank.
Step 3: Check with your agent and make sure there are no other offers on the property. If there are other offers ask your agent, whether the bank will accept backup offers.
- Some banks only look at one offer at a time. Even though, your offer might be more than the other offer, some banks will not review your offer until the other offer has been denied.
Step 4: Ask your realtor for any prior inspections on the property.
- The banks are legally responsible to send you any and all inspections that they have on the property.
Step 4: Be sure to talk to your realtor to find out where he/she would suggest putting in an offer. They usually have a good idea, what offer would be accepted or declined.
- Some buyers want a price way below market value and end up missing out on the property.
Step 5: Review with your realtor the checklist that the bank is requiring to put in an offer on the short sale.
- The last thing a buyer wants when purchasing a short sale is that their realtor has failed to follow all the instructions from the bank when your realtor puts in the offer. After talking to many banks, I have realized this is a key mistake that realtors make when drawing up contracts for short sales. Some offers in this case might be rejected prior to the offer ever getting to the bank.
Step 6: Sometimes banks will not pay for inspections or any repairs on the property.
- When writing up the contract be sure that you and your realtor discuss not paying for inspections. After your inspections are completed and you know the repairs necessary, then during your contingency period for inspections you may accept or reject the property. If you are not pleased with the inspections and they are an exorbitant amount sometimes the realtor can negotiate to fix the unforeseen circumstances.
On one of my transactions, there were $37,000 dollars in termite damage. The bank was not willing to help cover any costs. This was an exorbitant cost for my buyer, so we chose to decline the property during the inspection period because the banks were not willing to assist with costs.
If you have any more questions in regards to the short sale process, feel free to call me at (818) 447-1024 .
“Oh, by the way, I am never too busy for any of your referrals.”