Buying Short Sale Homes is not for a faint of heart since there are more moving parts than a typical buy from a seller. The Short Sale approval process is a convoluted process tangled in legal and compliance need of banks who are holding this property as a collateral for their loans. And the odds of success in Short Sale Negotiations depend on how much time you will have to navigate ALL the options that might be available to the Home Owners. If you are interested in a Short Sale home which is going through the approval, then you need to explore these questions from the Short Sale Listing Agent:
1) Hardship: What is the nature of the Hardship that the seller is going through. Typical Hardship reasons that are approved by the banks are loss of employment, unexpected medical and financial loss, approved move that is forcing the owners to sell their property.
2) HAFA or Non-HAFA: Find out if the Seller is attempting a HAFA Short Sale or a Regular Short Sale since the approval process and the requirements of each Short Sale are different.
3) Short Sales Attempted: Ask if the home owner has already filed for a Short Sale approval in the past. by HAFA Short Sale guidelines, if a home owners has received a Short Sale approval in the past 12 months and did NOT complete it, then their NEW Short Sale approval request can NOT be approved.
4) Number of Lenders: Find out how many lender are being targeted for Short Sale. It goes without saying that if there is only ONE lender, the odds of success of Short Sale negotiation are stronger than if there were more loans.
5) Who are the lenders: Each lender had their own process of accepting and approving Short Sale. Some lenders require a home owner to be late. There is enough public information about how long each lender is taking to approve a Short Sale and their calendar might not jive with your plans for the property. For instance if you are planning to flip this purchase within 60 days since you are using a Hard Money lender at 9% interest and there are 2 lenders involved that makes it a difficult challenge.
6) Notice of Default (NOD): Find out how many payments have the owner missed and if NOD been issued!? How long ago was the NOD filed.
7) Trustee Sale Date: Find out if the home owners have been notified of a Trustee Sale or Auction Date. If a home has a Sale Date within the next 30 days, that’s a risky proposition unless you trust the Short Sale Negotiator or the Short Sale Listing Agent will be able to get approval at least 2 weeks before the Trustee Sale date.
8) Bankruptcy: Find out if the owners have filed for bankruptcy, the liquidation of the assets is under the jurisdiction of the Courts which in most cases is a show stopper. Unless the bankruptcy is discharged, we would recommend you don’t bother with this purchase. You should also explore if the owner are considering filing for bankruptcy as well since that will also stop your Short Sale process dead in it’s tracks.
9) HUD Counseling: Most lenders now require that the home owners contact Department of Housing and Urban Development (HUD) to explore ALL their options to avoid foreclosure. The lenders now require proof of HUD Counseling prior to the approval of Short Sale.
10) Hire the Right Team: Just like any other ventures, your success will depend on the strength of the team you can assemble to help you with Short Sale Home purchases and that includes the Real Estate team who know the market and have both Escrow, Contractors and Property Management skills to help you succeed.