A proprerty that is being sold as a short sale can be a great investment opportunity for prospective buyers.  These properties are almost always being sold well below market prices. 

Please contact us at info@knoxvilleforeclosurehelp.com to obtain a current list of available short sale properties that fit your buying criteria.


Tips on buying a short sale property:


Know what's going on. In a short sale, you are dealing with several parties (the sellers, their agent and the sellers' lender). As a result, a short sale can take anywhere from two and six months to complete the transaction, compared with about 30 days for a typical residential real estate transaction. Many banks are willing to take a loss on a mortgage in a short sale if it means avoiding an even bigger loss in a foreclosure.  However, with so many owners trying to unload properties, the lender's negotiators are flooded with short sale offers. If you're moving from another property, keep in mind that you'll likely need to budget for a few months worth of potential rent payments so you have somewhere to live in the interim. In the end, your patience will be rewarded with a great deal on a house!

Work with a pro. Lenders often make realtors who work on short sales take a hit on their commission, so some brokers may not want to show you the listings. However, don't even think about going solo. These deals take a lot of work and persistence.  Make sure you sign up with an agent who has experience with this type of real estate transaction.  Ask your agent how many short sales they have successfully closed.

Refine your search. Most listings will indicate in the description whether the property is a short sale. Ideally, you want to knock off ones that come with extra complexities.  Contact the seller's agent to obtain as many details as possible about the current status of the seller and the property.

Timing is important.  If you find a property that you are interested in, don't wait too long to submit an offer. Short sale properties are typically sold well below "market prices" so they don't stick around on the market very long.  In a situation where there are other offers submitted before yours, you'll most likely have to wait in line. That's because if another offer is pending, the seller's agent isn't likely to even submit yours for approval until the first one is rejected, meaning you'll have to wait for another negotiation to play out before you even get a chance.

Making the offer. Don't just rely on the current list price to come up with your initial bid. The seller's agent may have far underpriced it in hopes of attracting buyers, but the bank likely won't accept a lowball offer. Work with your agent to determine the home's market value by searching comparable sales in the area, with an emphasis on other short sales and foreclosures.  A good starting point is if the fair market value is lower than the list price, set your offer 10% lower than that.  You'll also NEED to obtain a preapproval letter for a mortgage. Many lenders won't even consider your offer if you don't have one. If you plan on using cash to purchase a short sale property, you will almost certainly have to provide proof of funds with your offer.  Almost all short sale transaction will require some form of deposit (earnest money) to be placed in escrow until the transaction closes.  Contact the listing agent to confirm the amount required.

Communication. After your offer is submitted to the lender, you're not likely to hear a response for at least a few weeks. This is no time to relax. Make sure the lines of communication between your agent and the seller's agent remain consistent, even if there are no updates at the time.  

Getting an Offer Accepted. If the bank sends a counter offer, it is many times a "take it or leave it" scenario. Most lenders will not negotiate past their initial counter offer. Their terms are based on internal research based primarily on a BPO (broker price opinion) and/or actual appraisal. The lender's goal is to mitigate loss and "net" more proceeds from the short sale transaction than from a foreclosure sale.  However, each lender/mortgage holder has their own policies when it comes to short sale transactions.