Jul 19, 2012

21 Ways To Prepare For A Short Sale Purchase
                               (PART 3)

This is the third article about "preparing to buy a short sale property."  Here are the last 7 buyer tips:

15) Everybody Wants Some Money:  A short sale may involve multiple lien holders, all of whom want to recover the money they have secured by the property.  Here are the most common types of liens that require agreements before the short sale can close:

a. 1st Mortgage Lienholder
b. 2nd and 3rd Mortgage Lienholders
c. Homeowner Association
d. Secured Credit Cards
e. Court Secured Judgments

16) Buyers May Help Settle Some Liens:  Depending on the type of “deal” the buyer is getting on the sale of the property, some lienholders may ask the buyer to participate in settling amounts owed to the lienholders, before the seller will agree to consumate the short sale.  If the seller cannot pay, the only way to close the transaction is if the buyer agrees to pay.  At times, buyers will agree to cover a portion of the outstanding liens, and others will not.  It really depends on the value the buyer feels they're getting out of the transaction. 


17) Competition Drives The Price Up:  If a buyer finds themselves in a competitive multiple-offer situation, and actually offers more than 'list price' to get the house, then any amount that exceeds the list price will probably need to be paid in cash at closing.  This occurs when the value of the property is less than the offered price.


18) Properties Are Sold 'As-Is':  Most sellers will want the buyer to conduct their property inspections before the short sale transaction is approved by the lender.  Short sale properties are typically sold “as-is,” and the short sale lender will not agree to perform any repairs anyway.  If a buyer encounters inspection issues that they cannot live with, the buyer must then walk from the transaction.  A buyers' earnest money is generally refundable under those conditions.


19) Be Ready To Close:  Buyers must be flexible and prepared to close.  Once the short sale has been approved by the lender, most transactions are required to close within 30 days.   Buyers should make their moving plans in advance, and be ready.


20) Don’t Forget About The 'Buyers' Lender:  A buyer’s own mortgage lender must prepare to close the transaction quickly, and after the short sale transaction is accepted.  Buyers should communicate with their lenders routinely, and make sure their lender is ready to order appraisals, loan documents, and everything else to close on time.  Stay in contact and keep your lender posted about what is going on.

21) Short Sales Are Like A Board Game:  After reading this 3-part article, you now know that most short sales have inherent and unpredictable twists.  To really get a feel of how complicated a short sale transaction can become, read this related article: Denver Short Sales Are Like Playing A Board Game.

For all the reasons stated above, Denver-Area short sale transactions are unpredictable and may not be the best option for every home buyer.  You should avoid short sale properties, if you have anxiety about the short sale process.  There are many good short sale properties available to buy, but they may not be right for you.  Buyers should pursue a short sale transaction with their eyes-wide-open, and fully prepared.  

I have managed many successful short sale transactions, and will advocate for a successful outcome for every buyer who chooses to make a short-sale offer.   

Part I - Denver Buyers Prepare For Short Sale

Part II - Denver Buyers Prepare For Short Sale

Michael Dagner is an expert in Denver-Area home sales,
and a member of Short Sale Superstars. Call today, (303) 514-4000,
for help with your short sale, or purchase.

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