However, short sales can be challenging. They often draw multiple buyers, who compete for the winning bid. It can take a while for all the paperwork to wind its way through the approval process.
A short sale occurs when a house is sold by someone whose outstanding mortgage balance is more than the house is worth. The owner works with his bank, which must agree to accept less than it is owed on the house. As a result, short sales often take longer than a traditional sale.
Here are some tips to successfully purchase a short sale:
- Work with a knowledgeable real estate agent who has experience with short sales. Your agent will be able to keep you up to date on new listings as well as help walk you through a process that can be lengthy and frustrating at time.
- Stay up on the market so you know when new short sales become available.
- Act quickly! When you spot a house you like, try to be the first to submit an offer.
- Be patient. These transactions often take 30 to 60 days—or more—due to all the documentary requirements.
- Submit a reasonable offer. Remember that the lender is looking to reduce its losses as much as possible and with competitive bidding likely for the house, your offers need to be in the ballpark.
- Try to include as few contingencies in your offer as possible. You won’t want to waive your right to inspect the property, but if you are pre-approved for a mortgage, then the lender may consider your offer to be more solid than other buyers’.