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For some people, an economic downturn is tragic. For others, it’s an opportunity to be taken advantage of. The real estate market is much more different than what it once was during a stable economy. Distressed sales are occurring which include foreclosures, short sales and real estate owned (REO) homes. With distressed sales, homes are sold at bargain prices, so that some people take advantage and buy a new home or go as far as to collect property. The real estate market experiences cycles, but in the long-run, real estate prices appreciate. This is a great advantage to buying a home during the recession.
A short sale happens when a home owner is under foreclosure, but the property hasn’t yet gone onto public auction. Under a short sale, the lender agrees to accept a lesser amount than that which is actually owed on the home. Basically, the seller’s lender accepts a discounted payoff to help release an already existing mortgage. Keep in mind that just because the home is listed under short sale terms doesn’t mean that the lender will accept the offer provided, even if the seller accepts the offer. Before buying a short sale, it’s important to be prepared.
First, research public records. Then, hire a real estate agent who has comprehensive short sale experience. Learn to qualify the property, as well as the seller for the short sale. For example, sellers must provide a letter of hardship to the lender. Submit proper documentation and a purchase offer to the lender. Offer a response time to the short sale lender. Understand that in short sale commissions, the lender actually pays the entity. Reserve your right to run inspections on the home.
Treat short sales as a step by step process. Be aware and prepared for the selling process in order to avoid any difficulties.
