Short Sale Buyer?

By Steven Jackson

As banks foreclose on many homes in our area, you can find some amazing pennies-on-the-dollar priced homes; but buyers also have opportunities to buy homes at bargain prices before a home goes back to the bank. These are typically known as “short sales.”

As an example, we recently represented a young (growing) family in the sale of their home and the purchase of a larger home. For their purchase, they zeroed in on a home that had sold back in late 2006 for $1,050,000...through our experienced and diligent efforts we were able to get them this home for $355,000! We can likely do something eqivalent for you, too.

What is a “short sale?” A short sale may simply be defined as the sale of a home at a price less than the existing mortgage balance; However, this is a highly complicated process with myriad variables. It is strongly advised that one hires an agent very experienced in the short sale process to help when you are looking to buy a short sale home. There are so many variables that the average buyer could be easily taken advantage of or lose out on a great deal. Realize that the majority of real estate agents have little experience in these sales (but they all call themselves short sale/foreclosure specialists). In order to be successful, you need to be very careful in whom you select to be your advisor/consultant/agent. Our general manager here at The Jackson Realty Group has been certified by one of the the most respected short sale education organizations as a Certified Distressed Property Expert (CDPE), one of less than 10,000 in the entire country. We have extensive experience representing buyers and sellers of short sale properties. Additionally, we are fortunate enough to be working very closely with two of the areas top short sale attorneys.

Some of the steps in the process are:
1) Locate short sale homes, as far in advance as possible of the Court Ordered Sale. (in negotiating a short sale you may need weeks or months of lead time)
2) Create a short list of such homes that you would actually consider purchasing for yourself.
3) Have your agent analyze and explain the neighborhood-it's history-current state and future prospects, the builder-their status in the subject community and in other projects-as well as potential construction issues.
4) Determine the status of default or foreclosure.
5) Have your agent research and analyze ALL mortgages on the homes you are considering.
6) Have your agent research the possibility of other liens (tax liens, mechanic’s liens, labor liens, state liens, IRS liens, etc.)
7) Determine WHO the lienholders are...this is important because an experienced short sale agent will likely have first hand or at least anecdotal familiarity with the negotiating processes and time-frames of various lenders.
8) Know how much to offer...again, an agent well experienced in short sales will be able to guide you to make an offer that is not higher than it needs to be nor is it to low to have a chance for acceptance.
9) Know which terms, conditions and contingencies that specific lender(s) will entertain and which they won’t...not to beat a dead horse but, you must have an agent that has extensive experience here or you will just be spinning your wheels.
10) Ascertain who will be negotiating the short sale for the seller and what their experience level is.
11) Determine how the offer/contract process is to be handled...is only 1 contract at a time presented to the sellers lien-holder? Are multiple offers sent in at one time? Are offers sent in at various times-as they arrive? An agent experienced in the process can explain the important distinctions regarding this.
12) Be patient and make sure your agent is committed to, and good at, follow-up (with ALL parties involved in the process)

The complexity and difficulty of closing short sales should never be underestimated, even under the best of circumstances. But, because the purchase price may be below the current market value of the home, it can be a great way to pick up equity immediately the day of closing. Many people who have selected the wrong agent (both buyers and sellers) have also come to a dead end with this process after months of frustration...don't be one of them.

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