San Diego real estate blog - Peter Toner

 We have received a lot of inquiries about short sales. The question is usually “Are short sales worth the headache?” Whether or not the process will be a headache all depends on who you are working with. An agent who’s never done a short sale might make the process more painful than necessary, while one who has at least done a handful of short sales will be prepared for the transaction and understand what’s involved.

Just because it is called a short sale doesn’t mean it will be a quick transaction …

A few things to know before becoming involved in a short sale purchase:

• Don’t assume that the home is a bargain. Some agents deliberately offer the home at a discounted price to ensure lots of offers and “overbids”. Before you get excited about a bargain have your agent run a comparable sales analysis to find out what the home’s true market value is.
• What status is the home in? Has foreclosure already been filed?
• Who “owns” the loan – homeowner/seller or lender? Is there more than one loan on the home and what are the loan balances?
• Have your agent ask if any offers are currently on the table or have any previous offers been rejected.

Know the Process:

• With your agent’s help, determine value and decide on your offer price. Discuss with your agent the highest price you will go to should the bank counter your offer.
• Understand that although the homeowner/seller may accept your offer, the note holder/lender may not agree, and counter at a higher price.
• Just to make make it more interesting the Lender may completely ignore your offer. Sometimes they go the easy route and just pick the best offer on the table - so don’t always expect a counter.
• Make the offer contingent on the lenders accepting your price. Also include in the offer as much information as you can to prove to the lender you can afford the home. (ie. Pre approval letter, down payment amount, etc.)

 Finally ~ Protect Your Rights

• Place a time limit on your offer to the lender. Many times the lender will drag their feet in accepting an offer in hopes that a better one may come along before they accept yours.
• Make sure to put in the offer that the purchase is contingent on you being able to have a home and pest inspection performed on the house.

Written by Shawn McDonald.