Yes, You Can: Land a Loan on a Short Sale HomeOn February 12, 2017 by Danny
You’re looking for a new home, and your real estate agent floated a good idea your way: buy a short sale home. Short sales are sales where the seller needs to sell (they’re motivated) because they can’t afford to keep making the mortgage payments. They are usually working with a bank and a real estate agent to unload the property quickly. While it might seem a little risky, there are many good things about buying a short sale home.
For starters, the bank often gives money to the seller in exchange for upkeep and maintenance of the house until it’s sold. When you do finally find the perfect house, usually the only thing standing in your way is the bank. Here’s how to overcome lender resistance and snap up the keys.
Get Pre-Approval From Your Bank
Getting preapproval from your bank is the very first thing that should be on your mind when you’re going for a short sale. Your bank needs to approve your loan in the same way it would approve your loan for any other home purchase.
Having a preapproval allows you to walk into the seller’s home and make an offer immediately. Since the seller wants to sell quickly, he or she is unlikely to wait for you to go to the bank after the fact to get the loan.
Talk To The Seller’s Agent
Talking to the seller’s agent is usually done through a broker or real estate agent. What you’re trying to do is set up the offer and find out what the seller is asking for the home. Normally, the listing price is not the price that the bank will actually accept.
It sounds strange, but when a Harrison Short Sales Specialist lists the home, what they may be doing is trying to bring in potential buyers and start a bidding war. There’s nothing sinister about it. It’s just the way things are done in the real estate industry.
Work With The Loss Mitigation Department
Most banks have a loss prevention or loss mitigation department responsible for bringing late loans current. These people are also responsible for short sales. You may have to contact this person several times during the bidding process (or your agent can contact this person) to work with him to increase your odds of having your proposal accepted.
Making The Offer
Start with 10 percent below the FMV, but expect to increase it from there. You want to make a comprehensive proposal for the short sale to your bank too. Show evidence of the current mortgage holder’s financial problems, including a real estate broker’s price opinion or the low market value of the seller’s home.
You should also provide proof to the seller and agent that you can guarantee financing on your end.
Once the offer has been received by the seller’s agent, you play the waiting game. They may come back at you with a counter-offer. Let the bidding begin. It ends when you both settle on a price you both can be happy with.
Lisa Anders has been in the real estate industry for several years now, helping people stay in their homes during a financial crisis. She is also a passionate writer who loves to give people the information they need today. Look for her real estate and investment articles on a variety of blog sites.