Five things buyers need to know when purchasing a short sale

Five things buyers need to know when purchasing a short sale.

1.) Neither the seller nor the lender is likely to make repairs to the property. Many
short sale properties have deferred maintenance, as the seller may stop paying for
maintenance as money becomes tight. By the time the sale occurs, many short sale
sellers are either unable or unwilling to pay for repairs. They realize that every dollar
they spend on the property is a dollar they will not receive back. If a buyer wants to
purchase a short sale and the property requires repairs before the buyer’s bank will lend any money, the buyer should find a way to make the repairs themselves or find a
different property to buy. There is a risk to the buyer repairing a house before they
purchase it or obtain a short sale approval to purchase it. If the buyer improves the
house and the short sale fails or the buyer opts to walk away, then the buyer will have
wasted their time and money on a house they will not own. Furthermore, few
contractors will work on a property and wait to be paid at closing.

2.) If the buyer waits until after the short sale approval is granted to ask for a repair
concession or lower price, it is far less likely to be approved. Some buyers wish to
wait until after a written short sale approval is granted before they conduct their home
inspection. In a regular transaction, the inspection period may be an opportunity for the buyer to request a credit or price reduction for repairs. Buyers should realize that if the seller’s lender has already approved a short sale, then it is highly unlikely that the lender will allow a price reduction or repair credit. If a buyer believes that a repair credit or price reduction may be needed, they should conduct their home inspection right after the signing of the Agreement of Sale. It is much easier to amend the price or terms of thetransaction before the seller’s lender makes a final decision. In most short sale transactions, it is better for the buyer to conduct their home inspection right away insteadof waiting for a short sale approval.

3.) It may take months to receive a response from the seller’s bank. Short sales
happen gradually, then suddenly. A buyer who must move into a home within 60 days of submitting an offer should seriously consider making an offer on a property that is not a short sale. The closing date is hard to predict early in a short sale negotiation process. Furthermore, there is a risk that a short sale may not be approved, and the buyer may not learn of this until weeks have passed. Anyone who wishes to buy a short sale should be patient and not under pressure to move in soon.

4.) If the buyer is under contract with the seller, it is important to ensure that the
property is taken off the market. The policy on how to mark a short sale listing in the
Multiple Listing Service (Pending, Available with Contingency, or Available, among
others) is subject to the office’s Broker of Record and the local Association of
REALTORS®. Once a seller signs an offer from a buyer, some listing agents mark the
listing as being under contract with no more showings as a sign that the seller is
committed to that buyer. Other listing agents continue to market the property, soliciting offers that may be superior to the one that the seller already signed. If the listing agent continues to advertise the property, that jeopardizes the initial buyer’s position, as there is a distinct possibility that the listing agent and seller may seek to terminate the agreement in favor of a better offer. If the buyer has already paid for inspections, an appraisal, an interest rate lock, and other costs associated with the purchase of real estate, the buyer may forfeit those costs if their agreement of sale is terminated. It is best for a buyer to insist that the listing agent mark the listing as pending/under contract.

5.) Be prepared to pay a little more at closing, as last-minute payoffs creep up that
the seller and their bank may not pay. As the final fees and costs are tallied on the
Settlement Statement, there is a possibility that someone will have to pay more than
expected. A water bill that is higher than planned, a late fee added to a delinquent lien,
or a property tax credit that is smaller than anticipated could increase the seller’s costs.However, the seller may not have the funds to pay the extra cost, and the bank may beunwilling to take less to cover the shortfall. That may mean the buyer has to pay a little more just to ensure that the transaction occurs. The buyer should be prepared to absorb several hundred dollars in additional costs just in case.

Source: #Significa

#Short Sale, #poconojack, #real estate for sale