A short sale is a type of property that is, potentially, being sold for less than what the current homeowner owes on it. A verified short sale is one that the lender has already agreed to. That means that the lender has agreed to allow the homeowners to sell the home for less than what is owed, and allow them out of the financial constraints of the mortgage loan. Short sales may be necessary for many reasons, such as the seller's risk of foreclosure or need to move quickly. Yet, for mortgage lenders, that means a cut in profits. This makes buying a short sale sometimes a difficult process. There are some tips that can make the process easier on you, the home buyer.
#1: Are You an Investor? Get Educated First
If you plan to buy short sales for their affordability and then flip them, you could see a significant profit. However, not every property labeled as this is worth it and some will not yield a profit. For this reason, if you plan to use these properties for investment needs, you'll want to take a course before jumping in.
#2: It's Not a Sealed Deal
Mortgage lenders can stop a short sale at any time or simply not agree to one even if they have previously. A short sale application is rejected without any reason in many instances. For this reason, you'll need to have time on your side. It can take 30 days or more to get an answer.
#3: Don't Skip the Full Inspection
A short sale is often agreed to buy lenders when the home is sold in an "as is" condition. Yet, you still need that home inspection. Some of these properties are neglected and you need a full understanding of what you'll be putting into the property before you invest.
#4: Get a Title Search
Another common problem with some short sales is the lack of a title search completed. Hire a professional to do this for you and be thorough about it so there are no surprised down the road. You don't know what the history of this property really was.
#5: Pick the Right Property
Locating pre-foreclosures in your area is a good way to find short sale opportunities. Don't assume that lenders will not accept your offer. Not all pre-qualified short sales are worth buying but some pre-foreclosure properties are ideal for this purchase.
Taking these steps can help you to make a better buying decision. Don't put off getting all of the information you can about the property before you consider the purchase, though.
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