Here are some basic guidelines on what to expect when you want to purchase a Short Sale.
Once you write your offer you’re agent will submit it to the sellers agent, (listing agent). At this point you’re dealing with the seller not the bank. You’ll be negotiating with the seller until you can come to an agreement in the price and or terms. Once that happens the listing agent will submit your offer to the bank.
Short Sale: A short sale is when the seller owes more on the property than what it’s worth.
With your offer the bank will want to see a couple months worth of bank statements and pay check stubs, if you’re self employed they’ll want to see 2 years of your tax returns.
Be ready to wait, they are called short sales however generally you’ll wait a long time, between 3-6 months for the bank to approve it, if they do. The only time this really isn’t the case is if there was a approved buyer before you who got tired of waiting and walked away. If there’s a lot of interest in the property you’ll want to make sure your offer is as clean as possible. Below are a few suggestions:
1. Don’t ask for the bank to pay for your closing costs.
2. Offer a reasonable price, one that you’ll have a good chance of getting accepted. Have your agent do a CMA, (comparative market analysis), to establish what’s a reasonable price. The bank will send out their own agents to perform a BPO, (brokers price opinion), to show them what the value is and an appraiser. They aren’t in the dark as to the value themselves. It’s wise to submit this along with your offer.
3. Upon acceptance by the seller you’ll agree to put a 3% deposit into escrow. They will like to see that you’re serious and will appreciate that you’re putting some skin in the game.
4. Agree to pay for termite, HOA fees and maybe even some retrofitting. Banks usually won’t agree to pay the first 2 items. They’ll pay retrofit, however if it’s between you and another buyer or buyers offering to pay this could put you over the top.
5. BE PATIENT! The banks are generally understaffed, under trained and swamped. Your agent should give you weekly update as to the status of your offer.
I hope that you found this helpful. If you’re looking to buy, sell or invest please give me a call!
All my best,
Keller Williams Realty
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