Foreclosures and Short Sales Boom: What to Know Before You Buy
In the following article we will discuss the advantages and disadvantages of purchasing a short sale or a foreclosure. Because there are so many advantages, thousands of people are opting to purchase these types of properties today meaning there are often multiple offers on these properties. We’ll cover 6 tips for giving yourself an advantage in securing the short sale or foreclosure you have your heart set on.
- Include important documentation in your offer.
When you put in an offer, don’t just submit the offer by itself. Include a recent credit report, income documentation, down payment documentation, and your pre-approval letter. This will show your credit-worthiness from the very start. But, exercise caution and be sure to black out your account numbers and other vital information such as your social security number.
- Get pre-approved from the bank that owns the foreclosure.
Whenever possible, obtain a pre-approval for your loan from the same bank that owns the foreclosure and include that documentation with the other items above. If you cannot obtain financing from that bank, obtain a pre-approval from a credit union or other lender. Your mortgage professional will guide you in the right direction.
- Work With REALTORS® specializing in short sales and foreclosures
A REALTOR® who specializes in short sales or foreclosures will be an incredible ally to have on your side when purchasing. Because short sales and foreclosures do require a bit more work and tend to take longer than a traditional sale, you’ll want to work with an agent who is familiar with the process so that they can help you to expedite the process.
- Shop The MLS system daily
Although your REALTOR® will be looking for properties for you that match the parameters you’ve given them, you can further your own cause by shopping the Multiple Listing Services database every day through www.realtor.com. The MLS system is updated all day long and you will see as soon as new properties are listed upping your chances of being the first to make an offer on a property you want.
- Have your Mortgage Professional call the listing agent as soon as your offer is submitted.
Having your mortgage professional call immediately after you’ve made an offer will alert the listing agent that your offer is in, along with important documentation, showing that you’re serious about the purchase and that you’re ready to move quickly. This may give you an advantage over other potential buyers, even if your offer is a bit lower, since the listing agent will be able to ask your Mortgage Professional questions about your qualification.
- Be the #1 back up offer
Because of the growing interest in short sales and foreclosures, even though you are shopping the MLS, have a REALTOR® and a Mortgage Professional working tirelessly for you; you may still not be the first offer on a property. In this case, be ready to be the #1 back up offer. Because short sales and foreclosures can take several months, it is not uncommon for the first buyers in line to grow impatient and withdraw their offer. If you’ve done your work in the documentation preparation and pre-approval, you will find yourself in the prime position to get the property you want when the first buyers back out.
By putting in just a little bit of extra effort before and during your search for a new home and including short sales and foreclosures in your search, you’ll find yourself in a much stronger buying position. By working with a REALTOR® who specializes in short sales and foreclosures, and an experienced Mortgage Professional to assist with your pre-approval, you’re already on the right track. But, by adding the extra steps of showing proof of income, down payment, and more, you’ll be far ahead of other buyers. Finally, by being diligent in your search by scanning the internet daily for homes available for sale, you’re much likelier to get the home that you want much quicker and easier.