Greg Chan is a business and finance expert. He has authored many articles on short sales and foreclosures. For more information on how to buy short sales, visit BestForeclosureDeal.com
Are you interested in buying a new home or a real estate investment property? The current turmoil in the real estate market offers astute buyers great opportunities to buy real estate at a discount. A record number of homeowners are now either in or at risk for foreclosure. Foreclosure, however, will destroy the credit of a homeowner. An alternative to foreclosure is a short sale. In a short sale, the homeowner and lender agree to sell a property for less than the amount owed on the loan.
If you are considering buying a short sale, there are some key points you need to consider.
Get a Realtor: A realtor can help you find the perfect property. Choose a licensed realtor that has experience in short sales. Properties may or may not be listed as short sales. Short sale listings, however, often tip off that offers need to meet the lender’s approval.
Get a Lawyer: Even if the seller doesn’t have a lawyer, it doesn’t mean that you shouldn’t. A short sale can have tax implications since debt forgiveness may be considered income for the seller. In addition, a lender may go after the borrower for the difference between the amount owed and the amount paid. For more information and help finding a real estate attorney, visit RealEstateAttorneyGuide.com
Check the Local Market: Your realtor should be able to get you a comparative market analysis. You will be able to see active sales, pending sales, and past sales of other similar homes in the area.
Check Public Records: Before you make an offer, find out who is on the title, whether a foreclosure has been filed, and how much money is owed. Also check if multiple lenders are involved. Multiple lenders can complicate the approval process.
Get Pre-Approved: The lender will want to see that you are pre-approved and that you have a loan available.
Give the Lender a Deadline: Any offer you make should be contingent on the lender’s acceptance. Make sure to give the lender a deadline to accept, after which you are free to cancel. Most lenders should take two to three weeks to make a decision.
Expect Commission Negotiations: Since the seller is not receiving any money from the sale, it is actually the lender who is paying the realtor commission. The lender is likely to negotiate a lower broker’s commission.
Inspect the Property: Be sure to properly inspect the home. Do not waive your right to conduct inspections and make your offer contingent on approving them.
Buying a short sale can be difficult but can also be very rewarding. To learn more about buying short sales or foreclosures, visit BestForeclosureDeal.com
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