Buying a short sale home
Buying a home in a Glossary Term: short sale is a complex process that takes time and patience. However, including short sale homes in your search will expand your options. Here are a few things to consider before you begin your short sale home search.
What is a short sale?
A short sale is a commonly used alternative to a foreclosure. The property is listed for sale at fair market value, even if that value is lower than what is owed by the seller on the mortgage. If a buyer is identified and the property is sold, the proceeds from the sale are applied towards the mortgage debt. In some cases, the seller may not be responsible for any balance remaining after the sale.
Decide what you can afford
As you would when buying any home, before you start looking at short sale properties, determine what you can comfortably afford.
Getting Glossary Term: prequalifiedFootnote 1 gives you an advantage. You’ll be more knowledgeable about what you can afford and more prepared to make an offer. Plus, your prequalified status shows you’re not just browsing. These factors may help to make you more attractive to a seller.
Tips for a successful short sale search
- It’s advisable to use a real estate professional who specializes or has experience in short sales. When screening real estate professionals, ask if they’ve had experience closing short sales in your area. The Bank of America short sale professional locator at bankofamerica.com/agentlocator helps homeowners connect with real estate professionals who have specific experience with Bank of America short sales.
- Your real estate professional can recommend short sale properties as well as resources that you can research on your own, including internet sites, courthouse listings, the ads in the local paper, and the Bank of America Real Estate Center®.
- Have a licensed home inspector evaluate the condition of the property. Most short sale homes are sold as-is, and the cost of repairs typically become the buyer’s responsibility. Make a list of everything that needs to be fixed, research the costs, and factor them into any offer you make to ensure you could cover these expenses on top of your new mortgage payment.
- Have your real estate professional compare the selling prices of other houses in the neighborhood of similar size and quality to the one you’re considering. This will give you the best idea of a home’s Glossary Term: fair market value and help you and your real estate professional put together an offer.
Making an offer on a short sale property
Your real estate professional will prepare all the required documentation and present the offer to the seller’s real estate professional. The seller’s agent will then submit all the documentation to the lender. Keep in mind there may be multiple approvals required, which can prolong the process.
As the seller and lender consider your offer, they’ll need to determine the fair market value of the home. To do this, they’ll order a valuation of the property and look at the sale price of other homes of similar size in the neighborhood. Once the fair market value of the home is determined, they may make a counter-offer. It’s best to know what you’re comfortable spending, and be ready to walk away if the deal isn’t right for you.
Because multiple approvals are required, you should expect the process to take time. A short sale offer can take months to be accepted, rejected, or get a counter-offer, compared to a non-short sale property sale where offers can normally be turned around in 24-48 hours.
Once the offer is accepted, an approval letter releases the home for short sale purchase. When everything is in order, final documents are prepared and a Glossary Term: closing is scheduled.
Is a short sale right for you?
Buying a home in a short sale can be a good way to find the home you want at a lower price than similar properties for sale in the area-and it can be beneficial to all those involved. If you have the patience for the potentially time-consuming process, a short sale might be a good option for you.