Short-sale properties can be a great source of income for investors and a great deal for home buyers.
It’s important to keep in mind that a short sale is one where the bank has approved a loss on a current loan. They’re losing money, so they want to unload.
Generally, the current owner is in a rough time, or wouldn’t be facing the loss of the property. Difficult times mean tremendous amounts of stress and emotional turmoil.
How to Bid On a Short Sale Property
Bidding on a short-sale property involves a slightly different process than a traditional real estate transaction. Here are some steps to guide you:
- Get Pre-Approved for a Loan: Before you start the bidding process, get pre-approved for a mortgage. This will help you determine your budget and show sellers that you are a serious buyer.
- Find a Real Estate Agent with Short Sale Experience: Work with a real estate agent who has experience with short sales. They can guide you through the process and help you navigate any complexities.
- Research Comparable Sales: Look at recent sales of similar properties in the same neighborhood to determine a fair market value for the short-sale property.
- Inspect the Property: Schedule a home inspection to identify any potential issues with the property. Short-sale properties are often sold “as-is,” so it’s crucial to know what you’re getting into.
- Determine the Outstanding Loan Amount: Find out the outstanding loan amount on the property. This information will give you an idea of the lender’s potential loss and can guide your initial bid.
- Submit Your Offer: Work with your real estate agent to submit a written offer to the seller’s lender. The offer should include your proposed purchase price, along with supporting documentation such as your pre-approval letter and proof of funds.
- Negotiate with the Lender: Be prepared for a potentially lengthy negotiation process. The lender will review your offer and may counteroffer or reject it. Patience is key in short-sale transactions.
- Finalize the Deal: Once your offer is accepted, work with your real estate agent to finalize the paperwork and close the deal. Be aware that short-sale transactions can take longer than traditional sales due to the involvement of the lender.
- Be Ready for Delays: Short sales often involve additional paperwork and approvals from the lender, leading to potential delays. Be patient and stay in communication with all parties involved.
- Closing Process: Work with your real estate agent to navigate the closing process. Be prepared for potential delays, as short sales can take longer to close than traditional sales.
It can be intensely frustrating, so prepare yourself and don’t stress.
Get fully approved for any loan you plan to take long before you make an offer. Make sure your lender can close at the drop of a hat, because once the approval comes for the short sale transaction you need to be ready for escrow.
We secure properties via short sale, and we work with many investors and buyers who are looking for great deals on properties in the area.
Give us a call 919-629-1140 or get in touch anytime to find out how we can help you!