6 Tips for Buying a Home in a Short Sale

By: G. M. Filisko

Published: March 19, 2010

By preparing for a real estate short sale, you can emerge with a great home at a favorable price.

1. Get help from a short sale expert

A real estate agent experienced in short sales can identify which homes are being offered as short sales, help you determine a purchase price, and advise you on what to include in your offer to make the lender view it favorably. Ask agents how many buyers they've represented in short sales and, of those, how many successfully closed the transaction.

2. Build a team

Ask agents to recommend real estate attorneys knowledgeable in short sales and title experts. A title officer can do a title search to identify all the liens attached to a property you’re interested in. Because each lienholder must consent to a short sale, a property with multiple liens, like first and second mortgages, mechanic’s and condominium liens, or homeowners association liens, will be harder to purchase.

A title search may cost $250 to $300 up front, but it can help weed out less desirable properties requiring multiple approvals.

3. Know the home’s fair market value

By agreeing to a short sale, lenders are consenting to lose money on the loan they made to the sellers to purchase the home. Their goal is to keep those losses as low as possible. If your offer is dramatically less than the home’s fair market value, it may be rejected. Your agent can help you identify the price that’s good for you. The lender will determine whether approval is in its best interest.

4. Expect delays

There are two stages to a short sale. First, the sellers must consent to your purchase offer. Then they must submit it to their lender, along with documentation to convince the lender to agree to the sale.

The lender approval process can take weeks or months, even longer if the lender counteroffers. Expect bigger delays if several lienholders are involved; each can make a counteroffer or reject your offer.

5. Firm up your financing

Lenders will weigh your ability to close the transaction. If you're preapproved for a mortgage, have a large downpayment, and can close at any time, they’ll consider your offer stronger than that of a buyer whose financing is less secure.

6. Avoid contingencies

If you must sell your current home before you can close on the short-sale property, or you need to close by a firm deadline, your offer may present too many moving parts for a lender to approve it.

Also, consider ordering an inspection so you’re fully informed about the home. Keep in mind that lenders are unlikely to approve an offer seeking repairs or credits for such work. You’ll probably have to purchase the home “as is,” which means in its present condition.

This article includes general information about tax laws and consequences, but isn't intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.

G.M. Filisko is an attorney and award-winning writer who luckily has avoided the need for a short sale on her properties. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

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Copyright 2010 NATIONAL ASSOCIATION OF REALTORS®

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The Poll Results - What will this year bring?

Fifty per cent of the respondents felt the market would improve in the upcoming year while only 28 % had a pessimistic view. They believed that values would continue to fall. Twenty one percent felt that properties would maintain their values this year. This writer finds that having 72% of readers believe that values will hold or improve great news. The last several years have been the worst we have had in the last twenty years. I believe a slow and steady recovery is under way.

2009 vs. 2010 in Craven County Real Estate

For this comparison I examined residential sales in Craven County for 2009 and 2010. The average price decreased by 2.5%.  The total sales volume decreased by 7%. The average days on the market remained virtually the same.

Even  though the market continued its decline, the pace of that decline has slowed. Listening to financial news it seems as though the markets are improving. Apparently corporations have lots of cash sitting on the sidelines waiting to determine the direction the new congress will take. Many businesses are reporting substantial profits having cut expenses for the last two years. We are certainly primed for a recovery. Accurately forecasting the peaks and troughs of the markets are very difficult. I believe we are near the bottom and perhaps past it. I will advise my clients to buy. Interest rates will increase over the next twelve months. I believe the best time to buy real estate is now.

I would be interested in your opinion please leave a comment.

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Great new home constructed by Crayton and Company. 1400 square feet of heated space for $128,900 Three bedrooms and two baths in a great floor plan. The owners association provides the yard maintenance for $300 per year. Imagine not having to mow your own yard. Open floor plan creates a wonderful family atmosphere. 




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New Construction Report - Craven County

Home builders marketing is going better than the rest of the market. New construction makes up about a third of the homes sold in the last twelve months. Two years ago builders were having severe troubles. They had inventory that the market was rejecting. Nimble builders such as Frank Crayton, Pat McCullough, and Rick Schepard responded by creating products that the market wanted. Builders sold 288 of the 870 homes sold in the $80,000 to $350,000 range in Craven County. Currently there are 242 new homes on the market. (80 of these are Skysail condos) .Compare these numbers to the total market. See my Blog of November 1,2010. The great new homes that builders produce are often priced below the price of homes that were purchased during the strong market of several years ago. The fact that new homes capture such a large part of the market has hampered the individual trying to sell theirs.

 
 
 
 
 
 
 
 
 
 
 
by Gary Barker
 
Gary has been selling real estate in New Bern since 1977.

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Market Review - Craven County - Closed Sales

For this blog I chose to study residential sales closed for the last 12 months. I have limited the study to Craven County sales as reported in the Neuse River Region MLS. I decided to study homes that closed between $80,000 and $350,000. Hopefully that price range gives an accurate picture of our market. I chose to eliminate the luxury market and the very low end. The chart below depicts those sales.



June had the highest number of closings at 114. The lowest month was February with 50 closed. 875 homes in the study sold in the last 12 months. 995 homes in the study profile are currently listed. During the last twelve months 1081 homes entered the market. Assuming that approximately the same number of homes will enter the market this next twelve months, there will be a two year supply of homes available. A home must be superior in features or priced below others to sell. Sellers must be educated in current market conditions. An agent who lists homes for prices that are not likely to sell will harm his relationship with his clients.

by Gary Barker


Gary has been selling real estate in New Bern since 1977.


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Due Diligence - New Burdens on Buyer’s Agents

January 1, 2011 our world will change. Sellers, buyers and their agents will have new “Offer to Purchase and Contract” forms. Gone will be the contingencies that have added stress to everyone in a residential transaction. A lot of the members of the Neuse River Region Association of Realtors enjoyed a Continuing Education event with Bill Gallagher ( http://www.superiorschoolnc.com/ ). He taught the group assembled the features of the new contract adopted by NCAR.




The new contract will have a new feature called a “Due Diligence” period. This period resembles an option. It differs in that all of the terms of the final contract are included in one document. With an option the buyer gives notice that he will exercise his rights and contracts to close. With our new contract it will be assumed that a closing will occur. The buyer, in this new contract, will have to notify the seller if they do not plan to close. The buyer will use the diligence period to firm up a loan commitment, obtain an appraisal, perform inspections and determine if they want to proceed. The fee to compensate the buyer for this period of time will apply to the purchase price. Like an option fee it will be nonrefundable. A traditional earnest money deposit becomes “at risk” if this date passes and notice is not given for the buyer to withdraw.



This creates a new burden for Buyer’s Agents. The day of the free “look-see” is over. If the buyer determines that it is in their best interest not to complete the transaction money will be lost. If notice is given during the diligence period the loss will be limited to the “due diligence” fee and other expenses that have been prepaid. If the sale does not close after this period the earnest money will also be lost. Buyers will be unhappy if they lose significant sums of money on an incomplete deal. The competent buyer agent will attempt to assist his client to avoid a transaction that fails. The buyer will need to be educated in a variety of subjects prior to making an offer. Guiding them through the mortgage process will be key. It will be essential to have a pre approval from a lender who closes loans on time. Helping clients obtain and interpret the appropriate inspections will be important. Keeping track of the “Time is of the essence” dates will fall upon the buyers agent. Wisdom will need to be exhibited to avoid beginning a purchase on a property that will create appraisal and inspection problems.



I believe a buyers agent who does a good job will enjoy a greater loyalty from the client. It will be a tense time if the buyer decides to walk and absorb a loss. Over all I believe the new contract will cause our industry to become more professional .

by Gary Barker


Gary has been selling real estate in New Bern since 1977.

Visit my website http://www.gary-barker.com/ 

Great Deals after a Hot Summer

Interest rates are the lowest in years. Seller's are ready to accept your offer. Check out the Neuse River Region Association of Realtors MLS search engine on my website. Gary Barker Real Estate will help you to learn about our market and put together a team to make sure you get a great deal. Our Website has great area information. Call us to set up an appointment to begin your search. 252 635 1100