Buying a Short Sale

Most short sale discussions are Seller-centric, by the nature of the bulk of the work (listing, negotiation, settlement, consequences) being on the Seller side of the transaction. And yet, it takes two to tango. A short sale is not a sale, until is a Buyer who is willing to make an offer on the property is procured.  This is a brief discussion of the Buyer side of the transaction, and perhaps most importantly on the Buyer expectations needed to make this transaction a success.

Buyers looking to purchase a short sale property may be looking for a deal, the right house (or preferably a combination of both). While a short sale is a real estate transaction, there are many differences that the Buyer needs to be aware of in order to be certain that this is a road they want to venture down. The most important difference is the uncertainty of when a property will close. While it is true that all parties may be working toward a common goal in earnest, there are never any guarantees that a short sale property will close. Another aspect of the short sale transaction is the unpredictable timeline of the transaction. While there may be some guidance available on this (prior experience, specific timelines acquired from the bank), generally the timeline is rather “soft.” This means that a Buyer who has a specific need to be in a property quickly, is probably best advised to look at other available options.  

The price the property will finally close is another unknown. Generally the bank will not offer any information on the price they are willing to accept, instead calling for the highest and best offer that the market can bring. A skilled Listing Agent will market the property in a way that is logical and convincing of their earnest effort to procure such an offer. Here it is important to understand that any offer brought before the bank will be evaluated relative to current market values and responded to accordingly. If the offer is deemed too low, the bank may want to counter offer the Buyer to a value that is acceptable to them. It is therefore important that the Buyer and their Agent study the market and have good reasons behind the price they are offering on a house – reasons that can in turn be shared with the Seller and eventually the bank. Frequently the bank’s counter offer is acceptable to the Buyer, who may have not offered their highest and best (or are persuaded by the bank’s reasons for a counter offer), and another price can be mutually arrived upon. Again, a skilled Buyer’s Agent will represent their Client’s best interest in this situation, but being able to look at the market values and interact with the Lender’s position, mindful of the Buyer’s wants and needs.