Here in Northern Nevada, you will find over 800 active single family short sale listings. It is hard not to come across a short sale listed property that you like when searching for a new home in this area. Short sale listings are quite common and make up a large part of our real estate market. If you are looking to buy a home in this area and are interested in purchasing a short sale property, there are a few things you should know about short sales.
Of course, you should know what a short sale is. Quite simply, a short sale means the seller's lender is accepting a discounted payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it.
In some real estate markets, less than one in 10 short sales closes (although this number is getting lower). Just because that home is listed as a short sale doesn't mean it's really for sale (because it's subject to lender approval), nor does it mean it will sell at the advertised price.
Once you find a home and are ready to make an offer you will need help from a professional real estate agent. After you find an agent, if are considering a Reno, Nevada Short Sale property, there are five really important questions you need to ask your REALTOR® concerning short sales. They are:
1) Is buying a short sale right for me?
Don't be afraid to interview your real estate agent about short sales. Ask their advice and see if buying a short sale is right for you. Here are a few things to think about when considering a short sale:
You cannot be in a hurry! The short sale process is never, well almost never, a quick and easy one. Negotiation a short sale might only take a month but in most cases it will take at least 90 days or longer. So don't give notice to your landlord, hire a mover, change your address until you have confirmation that your offer is approved by the sellers bank.
You will also be buying the home "as is." In most cases the lender will not pay for any repairs and the seller is usually facing financial hardship and cannot contribute to the cost of repairs if any are needed. It will be up to you to get those repairs fixed after you close on the home. Getting a home inspection will help determine what repairs are needed.
2) Who will be taking care of the property if the seller moves out?
This is important because you don't want buy a home that has a dead lawn or water damage inside because of frozen pipes.
If you are buying during winter months and the seller has moved out, ask your agent if the home has been winterized, a process that keeps the pipes from freezing during winter months, or if the utilities will remain on until closing. Keeping the utilities on and inside temperature of the home home warm will prevent pipes from freezing. Both winterizing and keeping the power on in a vacant home will prevent unwanted water damage.
If you are purchasing during spring and summer months, keeping the utilities turned on is a good idea to prevent the landscaping from dying. If the seller moves out and refused to keep care of the lawn, find out what can be done to keep the water and power turned on. Ask your agent who is going to take care of this. Either the seller, seller's agent or your agent will handle this for you.
3) What happens if my lenders appraisal comes back lower than asking price?
Prior to writing any offers make sure your agent has completed a price comparable of sales and activities within a 1 to 2 mile radius of the home. Not only will this determine if the home is priced correctly, it will help you when you are ready to write an offer. Coming in as close as possible to the current market value is key in getting an accepted offer.
So what happens if the appraisal from your lender comes back lower than the short sale approval? Usually the selling agent will have to negotiate with the short sale lender to meet your lenders appraisal price. If the bank rejects this price they may simply cancel the deal. Game over. You need to be prepared for something like this happening when the short sale process takes 6 months or longer, where market values have declined after your offer was submitted.
4) How close is the home to foreclosure or does the home have a foreclosure date?
You don't want to waste your time if the property is close to foreclosure. Be sure to ask your agent to find out how long the home owner has been delinquent and if they are near foreclosure. Some lenders are good about extending foreclosure dates while some are not. You could end of wasting a lot of time on a home that has no chance of ever closing. Have your agent check regularly for notice of sale dates so that there will be no unexpected surprises down the road.
5) Does the selling agent have short sale experience?
Have your agent interview the selling agent. One of the most common reasons that a short sale, or any sale, will not close is the inexperience or poor business practices of a selling agent. Briefly interviewing this agent is a critical step in the process to make certain your deal will close.
Your agent should have will have interview questions for the listing agent. The way the short sale selling agent answers and handles these interview questions will be a good indicator of the way the short sale process is going to go. Experience is key to your short sale approval and closing.
Having confidence in both the selling and buying agent will help ease some of the stress of buying a short sale property. Knowing you have two professionals working toward a smooth closing will help you stay focused and on track with the short sale purchase. Always ask questions and be sure the REALTOR® you hire is able to answer any and all your short sale questions and concerns.
Five Questions To Ask Your REALTOR® When Buying A Short Sale
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