Question: My wife and I are looking to purchase a short-sale home. The seller has a listing price, but from what we understand, the bank has not approved a price yet. The house needs work, and we would like to offer 20k less for it. What process do we need to go through, and can we do this if the bank has not agreed to the listing price yet?
Answer: There is no simple quick answer to this question. The only sure answer is it takes time and patience to successfully complete a Short Sale. And in the scenario described above this will be especially true. If the Short Sale Lender, (the bank), has not yet approved a price, the sellers are still early in the approval process. It could still be several months, if at all, before the short sale is complete.
Short Sales present a unique opportunity for buyers; purchase a home at a 20% discount to market values. But the negatives may just be too great for many buyers; difficulty in obtaining financing, unbearable waiting and inexperienced Real Estate agents.
If a buyer must take occupancy within six weeks, has little cash and is using a government loan then they should avoid Short Sales. But if they have flexibility with the move times, some cash to do minor repairs and the temperament to handle negotiations and setbacks, then a Short Sale purchase might be appropriate. Many investors are buying short sale homes; they understand they may have to bid on several homes before they can close on one. They have the time, tolerance and dollars to see it through to the end.
To determine if it is right pursue a Short Sale purchase, a buyer should have an in-depth conversation with an experienced Real Estate agent. That agent must be able to ask the right questions to judge the chances of a successful closing. Are the sellers cooperating? What is their hardship? Have they made Short Sale application? Has a value been determined? Who is the lender? Who is the Negotiator? Who is the Investor? Who is the Mortgage Insurer?