A real estate short sale can be a win-win situation for everyone involved. The seller is happy and relieved to get out of a mortgage and avoid foreclosure. The buyer most often buys the property for a cheaper price than in a regular sale, and the bank doesn't need to enter the business of becoming a landlord or property owner temporarily. While it may work out great, there are common short sale mistakes to stay clear of if you want to close the deal:
Short Sale Mistake #1: Rush an Offer
Some short sales do need to happen sooner rather than later to maximize the advantages, but if you rush to make an offer, you'll overprice the purchase. That's a bad idea because you may buy a home or property that is worth less than what you pay. There are reasons why the seller was not able to keep up with their mortgage payments, and some of those reasons may be due to the economy and the market. You have to factor in the market conditions when making your offer, or you'll regret your short sale purchase. Take the time you need to do a market analysis and other research. Your real estate agent will help you with this if you have one.
Short Sale Mistake #2: Not Working with the Seller to Satisfy the Lender
The seller has an obligation to her lender to pay off the debt. The short sale can help, but the lender wants assurances that they will get paid. Therefore, they require a lot of paperwork, such as a hardship letter from the seller and a purchase contract. You shouldn't be hands-off with what the seller needs to provide the lender because the deal may not go through. Keep up with the seller and offer to help in any way possible to get the paperwork to the lender. It will increase your chances of the lender accepting the offer for the short sale.
Short Sale Mistake #3: Buying without Inspecting
If you come across a "sold as is" short sale, be very cautious. Don't make the mistake of thinking that you can get such a good deal on the property that you'll have money left over to make repairs and other improvements. The fact is that the final costs of what you need to get the house or property in good condition can end up costing many times more than you guessed by just looking at it. Get an inspection done by a reputable home inspector. Know exactly what you're getting into before you make the monetary investment. You might decide that the short sale is not worth it after all.
Working with a real estate agent who is experienced with short sales can help you minimize the mistakes you make, or avoid them altogether. Not all real estate agents know how to handle a short sale effectively, so it's important to get referrals from other satisfied buyers.