It’s commonly assumed that any Short Sale, Foreclosure or REO property must be a steal and a great investment. This may or may not be true. When considering the value of such a home, you need to look closely at other home sales in the area and be sure to take into account the time and cost of any repairs needed. There are some bargains out there in distress sales, and there are many that are not, too. This is an important reason to hire a Realtor who knows the process for buying a distress sale and can navigate you through it smoothly. Typically, to buy a distress sale, the process can take up to 3-4 months depending on the current number of distress sales the bank or mortgage company is currently handling. Some banks can get it done faster than others.
Remember, due to the current state of the Tampa market and the high inventory of homes, there are many fabulous deals on homes that are NOT short sales or foreclosures as well, and you may want to ask your Realtor to search both distress sales as well as regular sales. Due to the fact that the closing process can take longer with a distress sale, you may be able to find a great deal on a regular home sale and close quickly too.
Ready to make an Offer? How to Buy a Short Sale Listing
Buyers pursue short sales to get a good deal. So when you see a price listed for a home that you think is too low for the neighborhood, before you jump on that price, ask your agent to call the listing agent to find out if the home is a short sale. You might want to think twice about making an offer on a distress sale home. It's not as simple as you may believe, and very few can close in 30 days or less.
1. Hire an Agent with Distress Sale Experience
An agent with experience in distress sales will help to expedite your transaction and protect your interests. You don't want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner. It is imperative to find a REALTOR with distress sale experience.
2. Submit Documentation & Purchase Offer to Lender
Once the seller has accepted your offer, send it to the lender for approval. You do not have a deal until the lender accepts the offer. Also, send the lender a copy of your earnest money deposit. Do not be astonished if the lender asks you to increase it. In addition, the lender will want to see that you have your own loan available and you are pre-approved. Send a pre-approval letter to the lender. It will help if your agent sends a list of comparable sales that support the price you are offering to pay for the home. If you need a recommendation for a good lender, see our get pre-approved page for one of our preferred lenders. You can submit your application online too.
3. Give the Lender a Deadline
Make your offer contingent upon the lender's acceptance. Give the lender a time frame in which to respond, after which, you will be free to cancel. If the lender is under no pressure to make a decision, the paperwork will sit on an underling's desk. Some lenders submit short sales to committee, but most can make a decision within two to three weeks, providing you have submitted the offer to the individual in decision-making capacity. Get a name and phone number for the appropriate contact at the lender. Don't send an offer blindly to a department.
4. Reserve the Right to Conduct Inspections
Generally, the lender will not pay for customary items that a seller would pay. These include home protection plans for the buyer, buyer credits of any kind and pest / termite inspections. A buyer will be asked to purchase the property "as is," which means no repairs. It is extremely important that a buyer obtain a home inspection and pay for other types of inspections such as pest, roof, sewers, septic tanks, chimney or fireplace inspections. Do not waive your right to obtain these inspections and make your offer contingent on approving them.
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