Short sale home is considered a good investment where the selling price can be too low for the neighbourhood. You pay less than the mortgage amount currently owed by the homeowner. However, the promise of a good deal is not something you can trust blindly. The process of buying a house is now more complicated with a longer time to close the deal.
Moreover, there is no guarantee the previous owner maintained the property to specific standards. Still, the bargain price in your desired neighbourhood can worth all these troubles. Follow these tips to make sure you make the right investment with an offer on short sale home.
Define the Short Sale
The short sale is profitable only if the lender agrees to accept the payoff offer to release the current mortgage. The offered amount should be lower than the remaining mortgage on it. Therefore, there is no guarantee the lender London will accept the offer even though the seller has accepted it.
A significant factor to consider is the value of the house. Consult a real estate agent to get the actual price of the property. The homeowner may owe more than the current value of the property. The value of the property may also have fallen. In these situations, you will end up paying more than the market value with the short sale.
Go Through the Public Records
Comprehensive research is necessary before you make any offer. Give agent time to get information about the titleholder, foreclosure notice, and remaining mortgage amount. This information will help you put the best offer on the table.
The lenders are in no hurry to accept the short sale offer. Therefore, the offer must sound reasonable to both the parties.
Do Not Rely on Short Sale House
Once the offer is submitted, the process can take months to complete. It is different from a traditional purchase since the seller alone cannot seal the deal. The lender may have different levels of approval within the organisation.
The whole process of approval alone can take months to complete. Even after waiting for months, there is no guarantee the deal will close. Therefore, it is wise to look for other options after submitting an offer. You must have a place to stay for a long duration if you have made your mind to wait for the offer approval.
Hire an Experienced Real Estate Agent
The short sale process is not similar to the traditional sale. There are additional documents that need filling. The value and condition of the house are not the same for the neighbourhood. Therefore, you need a real estate agent with experience of these processes.
With enough experience, the agent will guide you through the whole process with no trouble. There will be no unanticipated situations that the experienced agent cannot handle. Feel free to ask them about their experience during the interview.
Qualification for Short Sale
Lenders agree to short sale the property when the amount seems unrecoverable from the homeowner. The owner, in this case, has no equity and the payment are beyond their ability to repay. A hardship letter is required to be submitted to the lender, and the seller may have to pay taxes on the amount forgiven.
Do not pay the seller any amount for purchasing the property. The amount is paid to the lender for the mortgage. The activity is illegal and will only result in you paying unnecessary money to the seller.
Submit Documentation to the Lender
First, you need to submit the offer to the seller. Once approved, the offer will be sent to the lender for approval. The lender may ask for proof of funds and a copy of the earnest money deposit. They may also check whether you are preapproved for a loan or not.
Preapproved loans will also help your real estate agent to find properties best suited for your budget. Send a copy to them as well dated within the last 4 weeks. You can apply for bad credit loans with no guarantor and guaranteed approval in UK involved from the direct lender to pay for the deal amount.
Wait for the Lender-Approval
The decision-maker in short sale deal is the lender, not the seller. Therefore, you need to wait for the lender to make the decision. Based on the size of financial institutions, the process can take from a few weeks to months.
Some lenders have a separate committee to manage the short sales. Moreover, there can be different levels of approval within the organisation to make the process even more time-consuming. As a buyer, you don’t have the authority to contact the lender. You can set a time frame to start looking for options after a stipulated time.
Commissions Are Involved in Short Sale
Seller pays the commission involved in a short sale deal based on the approval of the lender. Seller will not keep any money, but money will be paid to the listing agent, and your agent will share the amount. There is a very good probability the lender will negotiate the commission amount with the agents.
You might have to pay the excess amount if you have signed an agreement with the broker. Ask whether the broker is willing to waive off the difference between the agreement value and amount offered by the lender.
The property is generally sold “as-is” in the short sale. Therefore, the seller will not be liable to pay for the repair once the deal is signed. You can ask for an inspection and make sure the house is in good condition before making the offer. Remember, the possible repairs need to be paid by you in case the inspection is not carried thoroughly.
To sum up, a short sale is a great investment if the lender approves the offered amount. There are risks involved to a certain extent.
Description: With proper research and inspection, the chances of making a wrong purchase are significantly low.