Read This Before Buying A Short Sale Home

Shopping for a short-sale home can present an opportunity to find a deal when buying a house, but it's important to understand exactly what to expect from the process. In a short sale transaction, the property owner's lender agrees to accept the buyer's purchase offer, even though the offer is less than the seller owes on the home. Because of the unique circumstances required for buying a house on a short sale transaction, there may be some additional hurdles to clear before you purchase the home. Short sale transactions are increasingly common, and you'll want to read our guide before taking the plunge on a short sale purchase.

• Comparable Sales and Too Good-to-Be-True Prices
  One key to remember with short sales is that the lender or lenders have to approve the transaction, so the asking price could be much different than what the lender will actually require. A short-sale home with an extremely low price is unlikely to be approved by the lender, so it's important to look for comparable sales when shopping for a short-sale home. The closer your offer comes to the home's actual value, the more likely the lender is to approve it.
• Research Property Records and Loans
  Finding out how many loans are on the home and how much is owed will help you decide whether a short sale is worth pursuing. A property with multiple loans will require sales approval from multiple lenders, which can complicate the process. Some lenders are easier to work with on short sales than others, and your real estate agent should be able to point you in the right direction.
• Find an Agent Who Knows Short Sales
  Working with the right real estate agent should always be a top priority when buying a house, and that's especially true when you're targeting a short sale. In addition to having familiarity with various lenders, an agent with short sale experience knows how to navigate the technical details of the process.
• Short Sales Take Time
  You may have heard stories of short sales taking up to 6 months to close, and it's not uncommon for lenders to take multiple months to reach a decision. If you're hoping for a quick close, then a short sale is typically not the best option. If you can afford to wait, then you have a better chance of finding a deal.
• Short Sale Documentation
  In order to sell a home on a short sale, the seller needs to submit a short sale package. The short sale package submitted with the offer should make a compelling case for why the seller needs a short sale, and the listing agent will need extensive financial documentation from the seller for the short sale package. Make sure that the seller has the necessary documentation.
• Above Competition, Below Market
  If you're willing to take the extra steps required for a short sale, then you'll want to make sure that all of your hard work pays off with a good deal. The goal is to offer a price above other buyers, but below market value for the home. Your real estate agent should be a great resource when putting together your offer.

If you're considering a short-sale home, the first thing to remember is that the transaction takes time. By preparing for the process, researching property records, reviewing the required documentation, and working with a real estate agent who has short sale experience, you can successfully navigate the process of buying a house on a short sale.

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