10 things to look out for when purchasing a short sale

A short sale is a sale of real estate, where the seller's lender agrees to release the existing mortgage for a discounted payoff. If you plan to purchase a short sale, then you need to be more careful and pay attention to each and every detail. It is worth to look out for 10 important things when purchasing a short sale.

Checking public records:

Once you have decided to buy a short sale, you need to do some research. You can consult your agent to find out the name of the person in title and whether the foreclosure notice has been filed.

Check the amount owed to the lender:

It is also important to check how much amount is owed by the owner to the lender.

Type of property loan:

Sometimes, the property may be supported by two loans. Then it is crucial to gain the cooperation of both the lenders, when purchasing a short sale.

Track the record of short sale listing agent:

There are some listing agents who advertise about short sale, but they never close a short sale. Selecting them can be risky, because the listing agent is the most important person who needs to submit the short sale package to the lender and negotiate. It is an important thing to look out for when purchasing a short sale

Check the qualification of the short sale seller:

It is equally important to check the qualifications of the short sale seller. You need to confirm whether the short sale package consists of tax returns, payroll stubs, financial statement, hardship letter of the seller, W-2 (wage and tax statement) and bank statements.

Compare sales of the short sale houses:

Some short sale properties may be priced very low and it may not be possible for a bank to accept. In fact, the low price is a tactic to get the listing of multiple offers and thereby increase the price. It is therefore important to look for comparable sales, when planning to purchase a short sale.

Check the number of short sale offers received:

Generally, properties that are priced under market value receive various offers. You need to check how many offers are received by the short sale. If a short sale home comes to the market, the first offer would be normally lower than the list price, the second would be equal to the list price and the third and fourth offer would be more than the list price. It is advisable to look for these things when purchasing a short sale, because they can help you to determine whether you can make an offer that beat the competition.

Know the short sale procedure of the listing agent:

It is advisable to know the short sale procedures followed by the listing agent. Some agents may choose the first offer to submit to the bank and deny all the other offers. Though this is against the code of ethics, they follow this procedure to receive the highest price. If you get to know the procedures of listing agent, you can avoid wasting your time.

Know why banks reject short sale and how to make them accept the offer

Apart from these things, you need to know how to make the bank accept the short sale offer. You need to look for things that induce the banks to reject short sales. If the short sale offer price is too low, the bank may reject the offer. Again, if the short sale package is incomplete, the short sale would not be granted.

Always be clear in your point:

You should not let anyone confuse, when purchasing a foreclosure. You need to be clear with your requirements.

It is advisable to consider these ten things when purchasing a foreclosure. This can help you to get a great deal.

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