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5 Tips for a Successfully Buying Short Sale

By on July 19, 2011 in Money

Buying a home in a short sale can be a great bargain for potential home buyers. A short sale is when the bank or mortgage lender is willing to sell the home for less than the mortgage balance to reduce the loss the lender takes on the loan and to stay out of foreclosure court proceedings. While potential buyers can land a home at a great bargain, short sales are complex and typically length home buying process, so you should know what you are getting into before proceeding. By following some tips, you can make the process as successful as possible.

1. Build a Team of Experts

Unless you are a real estate expert, you need to start by assembling a team of expert professionals that can help you maneuver the process of a short sale. Primarily, you should seek out a real estate agent that specializes in short sales because they know all of the loopholes and pitfalls that can save you tons of time and headaches during the process. The agent also plays an integral role in helping you determine how much money you should pay for the short sale property and helps you through the negotiation process with the bank or lender.

In addition to a real estate agent that specializes in short sales, you also want to add a real estate lawyer and a title company that specializes in short sales. In many circumstances, the short sales lawyer expert and title expert ork for the same company so you can get a two for one deal..

2. Determine the Market Value of the Home

The premise of a short sale is that the buyer is getting the home for a value that is both less expensive than the market value and the mortgage balance that exists on the home. in order to make a realistic offer to the bank in a short sale transaction, you not only need to know the current mortgage balance, but you also need to know the current market value of the home.

3. Get Your Financing in Order

Even if you have not identified a short sale property that you are interested in yet, go ahead and get your mortgage financing in order. Go to the mortgage lender of your choice and obtain a preapproval letter from the lender. This helps when you make an offer to the bank that you are negotiating the short with because the lender knows they are dealing with someone who can buy the property.

4. Avoid Contingencies

In standard real estate property purchase contracts, there tend to be various contingencies on the deal going through. These contingencies allow the seller and the buyer several opportunities to walk away from the deal if the contingencies are not met. If you, as the buyer, start putting in a lot of contingencies in your offer to the lender, it can quickly send the bank running in the other direction. Avoid too many contingencies when making an offer. Instead, try to be as flexible as possible.

5. Be Patient

Short sale transactions do not work on the same timeline as a traditional purchase and mortgage transaction. It can take months for the bank or the lender to review all of the short sale offers on a home and then even to decide which offer, if any to accept. Even once your offer is accepted, it still takes the lender, in some cases months to close on the property. In short, you have to be patient.

Buying a short sale property can certainly land you a great bargain on the price of a home that you may not normally be able to afford. Following these five tips will help you make your short sale purchase experience as smooth and successful as possible.

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