Should I Make a Short Sale Offer?6 months ago
If you’re in the market for a home, or are an investor, buying properties through a short sale or after a foreclosure often allow you to buy properties at very attractive prices. But which one offers you the greatest advantage?
There is not simple answer to your question. Let’s take a look at both options.
If you wait for the foreclosure, you may be waiting months for the process to complete, and then waiting for the lender to put the property on the market. Once the property is on the market, you may need to compete with other buyers for the property, and deal with the listing real estate broker. The benefit to waiting for the foreclosure is you can close on the property quickly, once a deal is reached. The sale follows the normal sales process of buying any other home. With the current high inventory of foreclosed properties, you may be able to make a great deal on the home.
If you don’t want to wait for foreclosure, you want to lock down the house before your possible competition gets their chance, then a short sale offer may be the way to go. To make a short sale offer, you will most likely need to explain it to the home owner. The home owner will then need to process a request for a short sale to his lender, with your offer on the home.
During the short sale evaluation, as an investor, it is wise to closely evaluate the property, and to work with the broker who is doing the BPO, to get the lowest possible market value.
At this point the lender will begin the review process, looking at market values, and seeing if your offer is close to market value. They will also be evaluating the home owners financial situation, and the status of the loan. This process can easily take 2 to 3 months, and may end in approval or denial.
So, why would you consider the short sale over the foreclosure? Often you can negotiate a lower price on the property for a short sale. You also reduce the opportunity for your investment competitors to jump on the property. If you know the property would be highly desirable to other investors in your area, then working with the home owner on a short sale deal may be your best option.
The acceptance rate to buy a home that has been foreclosed is higher than the acceptance rate on a short sale deal. But the advantage of making the offer today, and avoiding possible competition, and getting the home you really want, makes applying for a short sale very appealing.
The only real answer to your question, choose the one that works for this property. If you want to get it locked down, make the short sale offer. If you can be patient, and if the property slipping through your fingers is ok, then wait for the foreclosure. Either way, investing in a discounted property gives you a great opportunity to own a home or investment property that can give you great value and profits in the coming years.