The Answer is….No. Less painful….yes!
Some Agent’s thinking (although this is becoming less and less all the time, especially with the new Short Sale Addendum to the Utah Real Estate Purchase Contract) is to collect offers on short sales and send them all in to the bank and let the bank sort them out.
If you find one of those, Run, don’t Walk away. You will never and I mean Never even get looked at.
Let’s face it- what would make your offer stand out from 10-20-50 offers (which happens with a really good property) all going into the bank at the same time? Little side note here, I talked to an agent the other day who said he had no less than 64 offers he had just sent into the bank. Did I show his property…uh no.
On the other hand, if you find a good short sale where the agent is treating it like a real transaction, and you are the first offer, or the 2nd offer (back up) you have a fairly good chance of getting at least the first right of refusal when the bank comes back with a price.
Here Is How A Realtor Can Help With A Short Sale
This is where your Realtor comes in. Your Realtor, and we are assuming that you have a good one, like us…uh blatant commercial here…will help you by researching the short sale, finding out what is owed on the property, where the sellers are in the short sale (translation how long you have to wait to get an answer) and how many offers are on the property…and the Really Good Realtors will get information like what kind of offers are coming in etc. That kind of information is INVALUABLE in making a decision on whether to pursue the property. Those of us who handle short sales on the buyers side also get to know the banks and can sometimes tell you what the bank is going to look for in an offer to make it acceptable…. kind of an insiders look, right?
In addition to finding a good agent to help you in the homebuying process (which costs you nothing by the way), you must also do your homework to be prepared to offer on that cute little cottage when you find it. The following are some suggestions to be prepared for. Your Realtor can also give you some great advice!
- Pre-qualify for a loan– banks will not look at your offer unless you have that “pre-qual” letter. You also need to know what KIND of loan you have so that your agent can structure the offer properly.
- Keep your offer and home buying to your mid price range– most listing agents want to see a range of buying power (i.e. offering 172,000 but you are qualified up to 185) on the offer they submit so that it won’t fall apart if the bank comes back with a different price than was offered (yes, they often do!) .
- Earnest Money– some banks will allow as little as $500.00 for earnest money, however, more often than not the bank will require $1000 up to 1% of the purchase price so be prepared.
- Closing costs– most homebuyers ask for them, but if you are negotiating on price, don’t be surprised if the price goes up if you need them and some FHA short sales and foreclosures only allow 1% in closing costs (see our post on closing costs here.)
So, yes, Virginia, you Can Buy a Short sale, but it takes patience, the right short sale, and a good buyers agent that will do the research, fight for and justify the price you want to offer, and most of all, communicate with you and with the listing agent to keep you in the game. As always, call, text or email us with questions, 801.819.9005 or firstname.lastname@example.org, cause we are, after all…great buyers agents (and humble too!)