Buying a short sale can be a great way to get your hands on a bargain-priced investment property. But with the housing market in recovery mode, the process of buying a short sale has changed. Here are three things you’ll want to do to adapt to the new short sale environment:
Make a realistic offer. The market has changed over the past year. Foreclosures and short sales are selling at less of a discount in most communities. Why? Because the market isn’t flooded with them any longer. Overall inventories of homes for sale are much lower, which has led to higher selling prices and, in a number of cases, multiple offers. If you have discovered a nice home at a good price, you are probably going to have some competition from other buyers. Talk with your Realtor to see how you can make your offer stand out.
Investigate the mindset of the seller. Programs designed to help people stay in their homes have expanded in scope over the past year. That means more people are eligible for assistance when it comes to saving their homes from foreclosure. As a result, some sellers have renewed their efforts to stay put. Check to see if the seller is trying to get a loan modification from their lender or through a federal program at the same time they are trying for a short sale. If so, you may have difficulty purchasing the property. Another good question to ask: Is the seller making it easy for potential buyers to visit the home? If the seller isn’t being cooperative, you may want to move on.
Watch for liens. Check to see if the property has any liens on it. Liens could be placed by municipalities for unpaid bills or code violations. They could also be linked to contractors who haven’t been paid, to the IRS for back taxes and even to homeowner’s associations for unpaid fees. Homes that have gone through foreclosure will have most or all of the liens removed. But with a short sale, that isn’t always the case.
Short sales take extra time and patience. But if you are prepared for the extra effort, the reward could be a great home at a great price.