Across many parts of the United States short sale properties have become the norm. Banks agree to do short sales when the homeowner owes more then the current value of the property. Most times the homeowners can no longer afford the payments and the property will be lost in foreclosure if it’s not sold.
A year or two ago the banks were scrambling to try to figure out what to do with these offers and how to handle a short sale. Now they have huge departments in multiple states that do nothing but handle these all day long. And many banks are overwhelmed with the flood of offers they are being sent. The volume of paperwork alone sitting on the processors desks is enough to clear several forests!
Most banks have their own process for short sales. This process must be followed if you are to stand a chance on getting the deal closed. Even when you have completed everything they require, it can still take from 3 to 9 months to get a deal fully approved.
For those who are patient that can be a big payoff. On the other hand, with the market continuing to decline in some areas, it can end up being no better then buying a home at current market value. Due to the lengthy process a majority of the time it’s not the first offer that closes the deal. It’s actually more like the 3rd or sometimes even the 4th buyer that will end up with the house.
Part of the process can be helped along by using someone that has a lot of experience with getting short sales closed. The process is time consuming and can be frustrating for most people, which is why a very experienced short sale agent or negotiator is so important. It takes more then just sending in paperwork and waiting for an answer.
Most banks will let you know, usually after months of waiting, if your offer is in their guidelines. That information will come out after it has gone through most of the process. Some banks are now doing a mini evaluation of the offer early on if they have a current appraisal or broker price opinion on file. With the changing market an appraisal that is 4 or 5 months old probably doesn’t reflect the current market and a good negotiator, working for you,will know that.
Investors who are willing to tough it out usually end up with a good deal. Most will be buying with cash which is a big plus for the homeowner since mortgages are much tougher to get then a couple years ago. There aren’t all that many investors in the market for short sales.
Most investors can buy and sell several REO (bank owned) homes in the space of time it takes to get one home through the short sale process. Like any other deal they have to go in with the right offer to make it worth while.
So if you want to invest in a short sale deal go for it. Just remember you need to be willing to wait several months in most cases before you’ll know if it’s going to be accepted by the bank. The process always happens in the banks time frame not the buyers.