Buying a Short Sale home is NOT for the faint of heart cause there are too many moving parts including a lender who could be trying to foreclosure on the property and a stressed seller who might NOT be sharing all of their plans with their listing agent.So, if you find your dream Short Sale Listing you should discuss these 10 questions with your agent before he/she writes you an offer:
1) Examine the Loans and Lenders on secured by the Short Sale property?
Depending on the number of loans the Listing Agent of this Short Sale could be required to negotiate with EACH lender to obtain the approval for the sale. We recommend to our buyers that they avoid homes which have more than 1 loan being negotiated to keep the risk manageable.
Also, not all lenders are created equal when it comes to Short Sale processing. Large national lenders have now invested huge resources and staff to help expedite Short Sale approvals specially with State mandated laws such as the one in California which requires a lender to make a decision on a Short Sale approval request within 30 day.
2) Is the the 1st time they are attempting a Short Sale?
If the Homeowners have attempted a Short Sales in the past 18 months and have NOT completed it, then the odds of this lender approving their Short Sale request are slim to none.
3) How close is the Property to Default?
It’s critical to find out when the last payment was made on the property and whether Trustee Sales has ever been postponed on the property. This is an important piece of information since most lenders will NOT approve a request to postpone a Trustee Sale (Auction) date; if they have not received a payment in the past 12 months. So avoid writing offers on Short Sales which are within 14 days of a Trustee Sale date.
4) What is the nature of the hardship
? Make sure the sellers have a legitimate hardship that the bank can use to approve their short sale. Most lenders have published list of hardships that they require to approve a short Sale which includes Job loss, medical emergencies….etc. Having a New baby does not qualify for a hardship!
5) Are Sellers considering Bankrupcy?
Filing for a Bankruptcy would stop the Short Sale process till a decision is made by the bankruptcy judge on the liquidation of Assets. So, if seller of the property has filed for bankruptcy, keep looking for OTHER properties while keeping an eye on this one.
Click below if you want to find out if you qualify for a Short Sale.