- Sarah Vance - REeBroker Group
Buying a Short Sale (REO Property)
Updated: May 2, 2022
A typical short sale transaction may run through (any or all) of the following steps:
1. Identifying potential short sales – buyers can look at pre-foreclosures online, courthouse, legal ads, etc.
2. View the property – go physically inspect the property and consider what renovations/repairs that may need to be completed.
3. Do your research – What’s the FMV? Is there profit potential?
4. Find all liens and mortgages.
5. Figure out the financing – have your financing figured out, because once an agreement is approved it may be too late to shop mortgages.
6. Contact the lender.
7. Complete the lender’s short sale application.
8. Assemble to proposal.
9. Negotiate the terms – it’s not uncommon for counteroffers, so establish your limits and budget beforehand. Don’t be afraid to walk away!
10. Seal the deal.
What to Expect – time, patience, and understanding through closing. The process can be complicated for the seller and therefore may take additional time. The buyer is receiving a great deal and investment as long as they are willing to put in the time.
Example of timeline process events: appraisal, inspections, approval of seller’s bank, and buyer’s lender.
Common mistakes of short-sale buyers – don’t make these mistakes!
+ Ignoring property problems
+ Skipping the home inspection
+ Ignoring legal and insurance information
+ Leaving too little time of closing
+ Falling hard for a bad home
The time frame of the contract to close – average about 3 months (min 2 weeks to 6 months)
What affects the time to Close Of Escrow:
+ Number of lenders and who each of the lenders are
+ Types of lenders
+ Homestead property
+ Retrieval of documents, responses, and all other communications from all parties
+ Offer contract terms? Bank’s counteroffer?
+ Buyer’s financing option
Submitting the “right” offer – know the seller’s motivation and strategy while working with a professional. Ultimately, it is the bank that decides the terms of contract acceptance for the short sale and forgiveness of deficiency of debt. So, the “right” or best offer is one made at fair market value.
Submitting a low offer – is a gamble, one that allows room for a competing offer to come in and be more attractive than yours. If you are offering what your comfortable with and what your budget allows then that is acceptable, however, be sure that you are not wasting time.
For more information on REO (bank-owned) properties/short sales including seller’s eligibility, pricing, required documents, tax or credit implications check out REeBroker Group’s Mentoring Program training documents.
Learn more: https://www.info.reebroker.com
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