Sacramento Real Estate Views

Buying A Short Sale?

Be Ready For A Long Wait

If you’re short on patience, please consider carefully your decision to purchase a short sale.  At the risk of sounding cliché..there is nothing short about a short sale.

Except, of course, losing your patience! That will happen very quickly unless you go into hibernation while we’re waiting!

Most short sales are now getting closed.  A very high percentage of them go through provided the seller hasn’t wait to long to initiate the process.

Most lenders, at least the larger lenders, aren’t postponing foreclosure sale dates or extending time frames for distressed homeowners to get the process completed.

There will be only so much your agent can tell  you about where in the process your offer is unless he/she also lists short sales or has extensive knowledge about the process in general.

Step 1 – Get Preapproved For A Loan

The first step to purchasing any home is to get pre approved for a home loan before you do any serious searching for a home.

You’ll need a minimum of 3.5% of the amount you’re approved for as a down payment.  If you are a veteran, 100% financing is available.

You will need to submit a letter from your lender, a copy of a deposit check and a statement from your bank reflecting you have the down payment to obtain the loan and close the purchase when making an offer.

When you’ve got that done, then you’re ready for Step 2.

Step 2 – Find  A Home

At the time of this writing, June 2011, homes are moving pretty quickly.  There are multiple offers on everything that is halfway decent.  That said, offering full price in most cases is getting accepted by most sellers.  There seems to be a lot of people who are looking to get a deal better than market price but right now, that’s not a good strategy.

Inventory levels have come down but that may not last.  If you find a home that you like, it’s best to offer full price, especially if it’s a new listing.  If it’s been sitting around for a few weeks, that’s another strategy but generally those are overpriced for the market anyway or there is a seller “agenda”.

Homes in the status “active short sale cont.” are often times unavailable but may accept backup offers.  Generally, you want to look for homes in “active” or “active short sale” status.

If you’re looking for a home to purchase, I’m available to help you.  Please call, email, text or simply fill out the form below and I’ll get right back to you.

Step 3 – The Wait

Getting you offer accepted by the seller is the easiest part.  The tough part is getting the bank to agree to the sale in a timely manner.

Short sales aren’t like a regular sale.  When a seller needs to sell their home short, they must first get bank approval to do so.  They will need to submit a packet of financial information, the agreement between their agent and themselves and then the offer.

The bank wants all of this up front, typically, before they will begin their approval process.  Understand there are MILLIONS of these situations nationwide and each lenders response time will be predicated, in part, on their workload. (as well as other factors)

Once the packet is complete and submitted, the lender will do their due diligence by assigning a negotiator, ordering an appraisal then assessing if the packet is legitimate.  This could take 30 to 90 days depending on the lender.

Once the approval is received by the agent representing the seller and all parties agree to the approval (there may be additional provisions that will need to be approved by the buyer) escrow is then opened and it’s typical for the bank to give a deadline to close escrow generally 30 to 40 days from the date escrow was opened.

Step 4 – Hang In There

Once your offer has been accepted and the seller has submitted their packet to the bank for approval, you’re going to have to hang in there if you really like the home you’ve offered on.

But…I do believe it’s in your best interest to continue to search for homes.  While short sales are successfully closing at a higher rate, they still sometimes do not close.

I generally advise my buyers to continue looking for homes until they have approval on the home they want.  Most listing agents, including myself, don’t like this approach but it’s a fact of our market at this time.

Looking for an agent to help you find a home or have additional questions?  Please fill out the form below and we’ll contact you promptly.

Thanks for visiting!!

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