Short Sale Process for Buyers
There are some key things to know about the short sale process for buyers. But, first what is a short sale? In real estate, short sales are kinds of sales where a house is sold lesser than what it is owed in a mortgage. Short sales happen because the seller (or homeowner) has become unable to pay their mortgage debt because of:
- Divorce
- Unexpected illness
- Job loss
- Death in the family
- Bankruptcy
The reasons for doing short sales are not limited to the five listed, but essentially, the main reason is that the homeowner can no longer keep up with the payments because of some financial crisis. He or she is now doing a short sale in order to avoid the undesirable effects of foreclosure.
With this said, a lot of buyers see short sales as good deals. They could be if the entire short sale process for buyers is reviewed and understood. Does this sound like you? Are you eyeing a property marked short sale in your area? Well, don’t make an offer yet. You have to know the a few important things first:
The Lender’s Role in the Short Sale Process for Buyers
As you may have known, it’s not just you and the seller who are involved. You have to acknowledge that the lender will play a big role in the short sale process for buyers. After all, the lender is the one who’s going incur the losses. Approving the short sale for the seller and the offer for the buyer is up to the lender.
The Lender Doesn’t Own the Property for Sale
In the short sale process for buyers, it’s important to remember that the lender (may it be a person or a bank) doesn’t own the property that’s being sold. It may seem like it because the seller has to get everything approved by the lender, your offer included.
When your offer is being reviewed, the lender might ask for the following:
- Proof of funds
- Your loan availability
- A loan pre-approval letter
You might also need the assistance of an experienced real estate agent to provide comparable sold listings list to serve as a supporting document for the price you’re offering.
Give Enough Time for a Response
The short sale process for buyers is not completed overnight. Some lenders still need the approval of a board or committee before they can pass approval themselves so it’s important that you give them enough time to respond. Be patient because you cannot contact the lender to follow up.
For you to be more in control of the time, give a time frame for the lender to follow. In a letter, you could state a reasonable time frame for the lender to respond. Once the time has elapsed, you could state that you can cancel the offer freely. If nothing else, be patient for a response from the lender.
An Expert’s Advice is Crucial
Every step in the short sale process for buyers is crucial so you do not want to jeopardize your chances of closing the deal with lack of experience. This is why it’s important to have an expert on your side. A real estate agent or a real estate solutions company that has experience in short sales should make the entire process run smoother and hassle free.
To know more about short sales and other real estate advice and tips, check out our other blog posts here.