Yesterday I received the following question from a reader thinking about buying a short sale:
My husband and I are interested in buying a home in the Snoqualmie Ridge neighborhood. Many/most of the homes (In our price range) appear to be short sales.
Do you have any suggestions or tips when attempting to purchase a short sale?
First, let me point you to the write-up I posted of my own experience buying a short sale. It won’t be a road map of every challenge you might encounter, but hopefully you will find it at least somewhat interesting and informative.
Second, here are some tips that I would give to anyone thinking of buying a short sale:
Be patient! The process is likely to take quite a while. If you need to find a home quickly, you will probably want to avoid short sales.
Look for a proactive seller. There are many things that a seller can do to help the process move more smoothly and quickly. In my case, the sellers had spoken with their lender, received the lender’s short sale packet, and submitted the initial documents to the lender before even listing the home. This helped things move along quickly once they accepted our offer.
Find out if the seller is eligible for aid. Again, in my case, The sellers were eligible for the Home Affordable Foreclosure Alternatives (HAFA) program. This helped things move along quickly since there were specific time limits enforced by an outside agency.
Work with just one bank, if possible. Many (most?) sellers attempting a short sale of their home did not make a 20% down payment when they purchased, but instead used two loans, one for 80% of the purchase price and the other for up to the remaining 20%. In this situation, they seller’s loans may be with a single bank or they may be with two different banks. When there are two banks involved, your chance of successfully closing a short sale drops dramatically.
Those are all the tips I’ve got, but perhaps there are some agents or home buyers or sellers here who have been through the process that can offer additional insights. If so, let’s hear it in the comments.