Why should you as a buyer consider a short sale? The answer is simple. You can expect an excellent buy compared to a normal seller not to be as motivated as a seller or an existing lender who may be facing a foreclosure action. The lender understands the monetary savings of selling the property prior to foreclosure. Saving money, time and headaches are certainly great motivators. Also short sale properties are typically still occupied by the seller and therefore are in much better condition than vacated foreclosed properties.

Again, as in the case from the seller, is the perspective short sale is a little more complex than the norm and you should seek legal and tax consultation

Second, is to select an experienced REALTOR to work with you in locating short sale properties. Multiple listing systems identify short sale properties. The REALTOR will also suggest some lenders that can issue you a pre-qualifying letter so you will know exactly where you stand on affordability that will allow you to narrow your search. You’ll also need the pre-qual letter to submit with your offer.

Keep in mind that in the offer there will be a condition that the short sale must be approved in writing by the existing lender or lenders. The offer will be submitted to the lender’s “Loss Mitigation Dept.” Also, typically, lenders require a number of weeks and even months before they respond to your offer. Ask your broker about an “opt-out” date provision if your timetable is a major consideration. This will allow you to cancel the contract if the lender is unresponsive within a stipulated time. Colorado also has a Real Estate Commission approved form called a “Short Sale Addendum” which will attach to the contract. Please have you broker go over the content with you prior to drawing your offer.

The lender, after receiving your offer will begin the process of evaluation of the offer which will possibly include sending out an appraiser to review the property or have a real estate broker do a Broker Opinion of Value (BPO) to establish pricing. Again, have patience as the process takes time. The lender or servicer will be handling a number of cases. Your broker should keep you informed at every step of the process. He should advise you of your responsibilities and the need to modify or extend dates as necessary.

Keep in mind that just as in a “normal” sale you should have a property inspection. You may want to wait until you have existing lender approval on the short sale prior to expending money on inspections and appraisals. Also realize that in most cases the seller may be unable to fix or make repairs due to his financial condition.

An important factor in the process is the actual foreclosure date. Have your broker contact the listing broker to request an extension to the foreclosure date if it appears you will not make the closing date. A contract extension may also be needed. You can now see why communication is an important part of the transaction.

The last step will be the successful closing.

If you are a “Short Sale” buyer or seller contact Danyliw & Associates, REALTORS, the short sale experts. We offer you over 40 years real estate experience, covering the entire Denver Metro area, From Castle Rock to Brighton.