1. Are you in a position where you can wait for the lender’s approval of the Short Sale?

A Short Sale has no pre-determined time frame, even if your agent writes one into the contract.  Short Sales can take anywhere from 30 days to 6 months, or beyond.  The lender is not in any hurry to accept your offer without certain tasks being completed, and certain factors being accepted.  Many times, when a short sale contract is presented to a lender, it is the first notification that the seller wants to have the lender consider this option, and the lender will have to go through a process to determine if the seller is even eligible for a short sale.   The entire process will also largely be dependent upon the skill of the Realtors involved in the transaction.

2. Do you have a home to sell before you can purchase the short sale?

If you have a home that you have to sell first in order to buy your next home, you will need to have it sold already, before making an offer.  No lender is going to consider you a qualified buyer if you are not financially able to complete the sale within a reasonable time frame.  Making your offer contingent on the sale of your home will most definitely assure you a rejected contract.

3. Will you follow through on feedback regarding, among other things, market value and contract contingencies?

Are you willing to present a reasonable offer based on current market value, or are you looking to lowball a lender in the attempt to ‘steal’ a property?  A lender is going to look at what the best avenue would be for their financial situation, and it could be that your “offer” would not generate the lender more money than if they were to just foreclose on the property and take it into inventory and sell.

4. Are you open to listening to the advice of your Realtor in what terms can or should be included in the contract?

A contract full of contingencies (stipulations about inspections, repairs, financing, etc) will likely get you a rejected contract.  The lender is interested in the bottom line, and the amount that presents to their side of the deal.  When making an offer on a Short Sale property, you will need to consider the property in AS-IS condition – they are not going to consider most repairs.

5. Do you understand that the lender will be making the final call on price and terms?

The lender will make the final call on the terms of the contract.  Unfortunately a buyer is not in a very good position to demand certain terms, because the lender would just as well foreclose on the property.

6. How willing are you to consult an attorney regarding home inspections, earnest money, and the contingency period for third-party approval?

Your Realtor can point you in the right direction in regards to inspections and such, but they are not an attorney, and if you have any doubts about any part of the contract, property condition, or terms, you will need to seek proper legal advice.

7. Are you willing to enter into an Exclusive Buyer Representation Agreement, and be responsible for compensation, should it not be paid by the seller’s side?

A good Realtor that can negotiate your deal, and follow through during the long process of a Short Sale is going to want to make sure they are compensated for their time.  Just as you would expect your boss to pay you for the job you agreed to do, your Realtor will need to be guaranteed compensation for their due diligence throughout the Short Sale process.  This is guaranteed through an Exclusive Buyer Representation Agreement.

There are many obstacles when considering the purchase of a Short Sale property.  Not only are you going to need to negotiate a price and terms with the lender, but you will also need to make sure the contract negotiations and closing run as smoothly as possible, and that no stone is left unturned.  You need to hire a Certified Short Sale Foreclosure Representative (SFR) to lead you through this difficult and often nerve-racking process.

For more information on how to make an offer on a Short Sale, call Michelle Fradella at Pinnacle Real Estate Services at 601-569-0075.