Step One – The Short Sale Real Estate Agent

The first step to take is to find a knowledgeable real estate agent. Yes, it may be a bit of a challenge, but short sales are quite different than standard purchases, and you need someone experienced and well-versed in the short sale process. Let the part-time agent find someone else to practice on. To find this super agent, ask friends, colleagues and neighbors who they recommend. Call or email your RE/MAX office for a referral to an experienced shortsale  broker.  Remember buyers’ agents and sellers agents may have different skills and experience and a shortsale listing agent may not be the best match for a shortsale buyer.

Step Two – Financing

Next, put the agent to work finding you a short sale property according to the criteria you have determined works best for you. While he’s doing that, concentrate on getting a loan. Visit lenders to find the best rates and terms. Although short sales are notoriously slow, once your offer is approved by the seller’s lender the pace may pick up, and you want to be ready to close when it does.

Step Three – Determine Market Value

Never assume that just because a house is listed as a short sale, it’s bargain-priced. When you find a house that you are interested in, have your agent compile a comparative market analysis (CMA) to determine its market value. Often, its value doesn’t match the asking price, so a CMA gives you a basis from which to determine how much to offer on the house.

Step Four – The Safety Net

Ensure that your broker includes language in the offer that allows you an out under certain circumstances. Some of these include finding another home or a home inspection that turns up needed and costly repairs. Lenders typically won’t negotiate the price because of considerable problems with the house. It’s imperative you are able to walk away from the deal when faced with huge problems with the home.

Step Five – Continue Your Short Sale Search

Keep looking at houses. Even if the seller accepts your offer, there is absolutely no guarantee that the seller’s lender will approve it or that the sale will conclude successfully. If you find another home that you like, that is easier to purchase, you may want to walk away from the short sale.

It seems as if everyone involved with the short sale, from the homeowner to the listing broker to the lender, wants you to believe that the short sale is the very best bargain opportunity of a homebuyer’s lifetime.  Don’t buy into the  hype. Do your homework and pay close attention to the comparables. Short sales often offer the chance to purchase a home at a discount but not always.  A buyer should proceed with caution. It’s a long process, full of pitfalls. Going into it with a savvy broker, and your eyes wide open, puts you a step ahead of the game.