The majority of the time, in order to avoid going through the costly procedure of a full home foreclosure, a bank or private lender might approve a short sale and let a buyer purchase a house for less than the current mortgage balance while the home is still in the pre-foreclosure stage. Therefore, as a buyer you can get a great deal on your new home.
How Do I Search for Short Sale Listings?
Your very first step may be to search your community newspapers for any property listings that are classified as “Short Sale”. Call your local realtor, who will have access to all of the current short sale listings. Another way to search is on the World Wide Web. Be sure to use the correct wording. Search Google for “Short Sale Listings” and add your city and state to find the right ones.
Some short sale listings are not always evident. Sometimes you will need to speak with a real estate agent to confirm whether or not a listing is short sale. Currently, there is a movement towards identifying all Short Sale Listings as such, so there will not be any commission disputes between real estate agents.
What Problems Could Arise?
Problems can arise when a real estate agent decides to take a listing on a property that may not yet be in default. This means that the seller is still making payments to the bank or private lender. If a notice of default happens to be filed during this time, the terms of the listing could be changed. It would now become a short sale listing, which is subject to negotiation with the lender. Most private lenders or banks will discount the commission. Commission should be divided 50/50 between the agents in question.
Why Should You Look Into a Short Sale?
As a buyer you will get the property at reduced price; however it may be a “fixer upper”. This is fine if you enjoy working on and improving your living space. Because the bank or private lender is eager to be paid the money that it loaned out, they may also offer some favorable financing terms. Because the seller is actively involved in this sale, you will likely have their complete cooperation. This isn’t always the case if the home has undergone a full foreclosure.
Before purchasing, be sure to view the property, do your research, figure out the financing, and assemble your proposal. After completing the lender’s short sale application, there will only be two things to do: negotiate, and have your offer approved, then you can seal the deal!