5 Crucial Steps to Buying Short Sales or Bank Owned Property

1. Establish your MAX purchase price

You need to know the maximum you’re willing to spend PRIOR to researching homes. There is a good chance you will come across a property you love and surprised at how low it is selling for which may be more than you initially wanted to spend had you taken the time to consider this factor. Before you know it you will find yourself countering back and forth on an offer well above your level of comfortability.

Work with your mortgage professional to establish the payments, loan amount, and cash to close you are comfortable with BEFORE your start shopping.

2. Establish a relationship with a Realtor®

Working with an experienced Realtor® when buying a short sale property is crucial, the reality is the seller is the current lien holder(s) NOT the person(s) residing in the home. Besides having the tools at their disposal to understand market values better Realtors® also deal with the issues working with banks can present. For example, almost all short sale contracts will include an “As Is” addendum which basically says once you buy the home you get it and all the problems it may possess. Be aware, quite often folks who are short selling do not exhibit the same pride in ownership, hence the potential for serious issues.

3. Make the proper offer

Other than the most important piece to your offer, the purchase price, items of consideration are:

Seller contributions - Seller paid closing costs, who pays for inspections, etc.

Strength of offer – The bank looks at this closely. They will ask themselves, “Is the person making the offer pre-approved?” “How strong is their offer?” Your mortgage person should assist with providing this documentation?

Timeline – The quicker you can close the more likely your offer will be accepted. Check out my speedy closing guarantee.

4. Inspection Time

It goes without saying a home inspection on a short sale is an absolute MUST. However, now is the time for your mortgage professional in tandem with the title company to ensure that there aren’t any additional liens or judgments against the property.

5. CLOSE!

Your mortgage loan should be locked and ready to go. Make sure you receive a copy package of your loan papers and of the home’s appraisal. Prior to making any improvements to the property be sure to research what monies get you the most bang for you buck! See my tips for home improvement page for more detail.