My sister and her husband were looking for a house near my house so that I could help with their newborn baby while they work. We were fortunate to find a house that was up for sale or available to rent. The owner said that he would allow them to purchase the home through him using an owner financing agreement. This made me a little nervous because I had read a few stories about people getting ripped off using this method of home buying. That is why I paid for my sister to have a real estate attorney to work with. Visit our blog to learn what to look for in owner financing agreements to protect yourself from loss.
When it comes to buying a new property, many people forget to consider short sales. However, short sales can be a very profitable purchase if you know what how to navigate the process. To help you with this, below are three things you need to know about buying a short sale property:
You Can Grab a Bargain
The whole logic behind a short sale is so that the current owner can avoid foreclosure and the lender can gain back some of the money that would otherwise be lost if the owner was forced to foreclose their home. This works out favorably for the lender as they don't have to pay eviction fees and administrative costs; also, in the event of a foreclosure, the lender would be responsible for all repairs required to take the home back to market.
This means that short sales can work out very profitable for you as the buyer. As lenders are only aiming to recuperate some of the money owed to them, the property will be on the market at a vastly discounted rate. This gives you the opportunity to purchase a home that you may not otherwise be able to afford.
Of course, this comes with some degree of risk. Particularly, you are responsible for all of the necessary repairs in order to renovate the home up to a liveable standard. The extent of these renovations can vary considerably between short sale properties, so be sure to thoroughly inspect the home prior to submitting an offer. However, if you are able to find a property that doesn't require much work, you can grab yourself a real bargain on the short sale market.
The Process Can Be Much Quicker
The process of buying a home on the regular property market has a tendency to become convoluted; if there are a number of offers on a property, the whole thing becomes a bit of a bidding war with closing dates extended while legal fees slowly eat into your budget.
With short sales, both the seller and the lender will be keen to finish the process as soon as possible. The current owner marketing the short-sale property will be keen to secure a deal in order to avoid foreclosure, which would leave them with a mountain of debt. Similarly, the current owner's lenders are keen to agree a sale as foreclosure could end up costing them a significant amount of money.
As such, the process of purchasing a short sale isn't as laborious as a normal property, as all parties are up against the clock in order to shift the property. This means that you and your family will be able to move homes relatively quickly, giving you more time to work on renovating the property and bringing it up to a liveable standard. This also saves you money in the long term, as you can move into the short sale property quickly and begin paying down your new mortgage loan.
You Will Need Professional Help
Buying a short sale property forces the bank to sell their asset at below market rate. They don't particularly like having to do this, so they use specialist companies to manage their short sales, hoping to draw out as much value as possible.
Therefore, to deal with this, you need an experienced professional of your own to help you throughout the buying process. Not all real estate agents will have the same skill and experience of managing short sale purchases; therefore, make sure you do your homework and choose a professional who is well-versed with the intricacies of buying a short sale property. This way, they will be able to advise you on how much discount is likely, exactly how to price your bid to secure the property, and how to deal with anything the bank may throw at you during the transaction. For more information, contact firms like Valentine & Valentine PC.