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Short Sale Information

Short Sale Articles

Preforeclosure Short Sale

Most buyers seek out pre foreclosure short sales to get better deals. But that doesn’t mean you should jump at the first home that’s priced lower than average; in fact, if you’re after a pre foreclosure short sale in particular, you may want to take more time to think it over.

Understanding Short Sales

A short sale basically means the homeowner’s bank has agreed to clear the mortgage with a discounted payoff. The seller doesn’t necessarily have to be in default to do a short sale. A pre foreclosure short sale occurs when the homeowner is already in the pre foreclosure stage, which means preparations are already being made to sell the home off.

Qualifying To Buy

One thing that makes a pre foreclosure short sale difficult is that both the seller and his lender must approve your offer. Needless to say, how you draft your offer plays a big role in whether you get to buy the home or not. Do some research before making your offer—find out how much is owed on the home, whether the mortgage is current or already in pre foreclosure, and whether there’s more than one lender involved. A real estate agent with short sale experience can help you find relevant information and decide how they affect your offer.

Inspecting The Home

It’s important to reserve your right to home inspection in a pre foreclosure short sale, as lenders do not normally pay for protection plans and insurance policies. Most pre foreclosure short sales are listed for sale “as is,” which means any repairs necessary will be handled by the buyer. Your agent can help you decide which inspections to carry out, such as roof, sewers, pests, chimneys and fireplaces.

Gathering Your Paperwork

Once your offer has been accepted by the seller and you’ve settled on a deposit, you’ll need to send it to his or her lender for approval. Make sure to include a copy of the deposit, and don’t be surprised if the lender requests an increase. Most pre foreclosure short sales will also a pre-approval for your own mortgage, as well as a sales analysis to justify your offer price.

Many experts recommend stating a time frame within which the bank can respond to your offer. That way, if you don’t get a reply before the deadline, you’re free to walk away from it. Most banks take two to three months to approve a pre foreclosure offer, but you can expect longer wait times if you include certain conditions or contingencies in your offer.