Buying Short Sale Homes is not for a faint of heart since there are more moving parts than a typical purchase from a seller. The Short Sale approval process is a convoluted process tangled in legal and compliance requirement 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:
Number of Loans: Find out how many loans are secured by the property and if ALL them are subject to the Short Sale negotiation. In our last Willow Glen Short Sale we were able to only negotiate with the 2nd Mortgage held by Wells Fargo since the 1st mortgage was being paid in full!
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 calender might not jive with your plans for the property.
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.
Foreclosure 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.
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.
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.