Buying a short sale can be a great way to own a home while saving a significant amount of money. It can also be a big source of stress if you’re not careful. Here are the five most common mistakes short sell buyers make – Avoid these mistakes to help ensure a painless, easy purchase process.
Mistake #1 – Low Balling
Many buyers have heard rumors of short sell deals where buyers have “stolen” homes from banks. So they try and lowball the offer. This almost always backfires. Banks will only accept an offer if it would save them more money than going to foreclosure.
Mistake #2 – Being Mentally, Emotionally Unprepared
Short sales usually take a long time and can have unexpected complications. If you’re purchasing a short sale, you need to be ready to handle these situations. Be prepared to pick up the phone and work to resolve issues as you move towards completing the deal.
If you’re looking to coast to a signed contract, a short sale might not be for you. If you’re looking to save a considerable amount of money (15% to 35%) and you’re willing to do a little bit of work for your savings, then a short sale would be perfect.
Mistake #3 – Not Knowing What is Owed on the House
You should know exactly how much is owed on the house, before you make an offer. You should also know if there’s only one lender or multiple lenders involved in the loan.
Finally, you should also know if there are any liens on the property, which isn’t uncommon with short sales. The last thing you want is to make an offer, only to be unexpectedly tied up by multiple lenders needing to look over the contract and liens that need to be paid for the title to transfer.
Mistake #4 – Inexperienced Counsel
Another mistake buyers often make is going with their favorite realtor who doesn’t actually have much short sale experience. A short sale is a different animal from a conventional sale. Instead of being the go-between between the seller and the buyer, a critical third party is also in the picture: The lender.
The lender is a huge factor to the deal going through and many realtors have no experience in this department. If you’re purchasing a short sale, make sure you find an experienced professional who can walk you through the process.
Mistake #5 – A Seller Who Isn’t Eager to Sell
It’s the seller’s job to put together all the complete documentation the lender would need to process the short sale. If the seller doesn’t submit the package in a timely manner, or if there are documents missing from the package, the short sale simply won’t be processed. If you have all your stuff together only to have your deal held back because of the seller – this can be incredibly frustrating.
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