Short sales are a large part of market place for the years to come, and if you are looking to buy real estate you can’t ignore them! I have met several buyers that think they can just completely avoid all short sale because of all the negative things they heard; well it shrinks your inventory some 30-50% if you do so.
The positives when buying a short sale are you can get a very good price. The negatives is the time it takes and really the uncertainly that the deal will actually go through. Below are a few things to be sure of when thinking about buying a short sale.
Interview the listing agent and the seller first! Make sure the probability that the short sale will go through. How much is owed? How many payments have the seller missed? Has the notice of default been filed? The most important question to ask is what is the seller’s hardship? If the seller does not have a hardship and is just a “dissatisfied homeowner” then the odds of the short sale decline. These are a few of the many questions you should have your agent ask in order to qualify the potential purchase.
Make sure the property will be vacated prior to close of escrow! Especially be careful if there is a tenant in the property. I recently wrote an offer on a property that had a tenant and my offer requested the “seller to give the tenant notice to vacate the property once we reach an agreement”. It also said my contract “time periods will not start until the property is vacant and the short sale has been approved”. Here is why that tenant can cause all kinds of problems and I do not want my clients to spend any money until I know the property is vacant and possession is not a problem! Can you image if my buyer entered a contract and the short sale was approve, and the buyer gave their notice to vacate the home they were renting, but the tenant elects not to move out?
I don’t think buyer can or should avoid short sales because they are getting much better and quicker! The important thing is to just prepare everything ahead of time so you do not put yourself in a difficult position. Yes they are more work but most times it equates to more reward!