When a homeowner can no longer afford the mortgage payments on a home instead of not paying them for months and allowing a foreclosure to take place, there is an agreement with the bank holding the note to accept less than what is owed on the property. This is called a short sale.
Short sales though are anything but. They tend to take longer than a seller listed property and can add a lot of hoops to jump through. But with these simple steps, you can start the road to short sale buying more informed.
1. Find and locate potential short sales - You can use our online database, search courthouse listings and legal ads or use an experienced real-estate agent as a buyer's agent. You will want to know how much the home is worth and how much it's being sold for to determine if it's a wise investment.
2. Check out the property in person - Look at its condition and come up with a rough estimate of how much it's going to take to repair or renovate. If you are looking for something that needs repair to boost equity you may be able to steer off other buyers that want it live in ready.
3. Research the property - What is the property worth? What's the profit potential? Make sure this is worth your time and investment whether or not you plan on living in the home.
4. Be aware of all existing mortgages and liens - Ask the seller or his agent what liens are on the property, and which lender is the primary lien holder.
5. Work out your financing - If you plan on getting a loan, the existing lender may be willing to give you a loan if you have good credit. Since the lender already has a lot of your information in the short-sale paperwork, it may be able to expedite the loan application process.
6. View and complete the short sale agreement - Each lender has their own set of paperwork to fill out and file.
7. Prepare all the documents and present to the bank - Your buyer's agent can be able to help in this area but these documents should include:
8. Negotiate and close the deal - Once you've reached an agreement with all three parties; you, the seller and the lender; get everything in writing and officially recorded. Make sure the seller understands all of the terms of the deal. Next comes the closing and the property is yours.
This is a complicated process but usually one well worth it in the end. You can typically get a better deal on a home and if you plan on remodeling anyway, this is a great way to cash in on an investment. For a list of short sales in the Clarksville TN real estate area, please contact us anytime!