How to Negotiate on a Short Sale when Buying
A short sale involves selling a house for less than the amount owed on a mortgage. A homeowner must get permission from his mortgage lender to sell a house in this manner and in most instances, the bank will require that the sale price be in line with fair market value for a given area. Buying a short sale house requires a good deal of patience because banks often take several months to review short sale loan offers.
Other People Are Reading
Instructions
-
-
1
Research the existing housing market to get an idea of the going median price of a home similar in nature to the one you're considering. This can be accomplished using an online tool like Zillow.com. Gathering this information will give you negotiating power when making an offer on a short sale property.
-
2
Find out how long similar properties have been on the market, and use that information as a negotiating tool. Certain mortgage companies would rather take a slightly lower offer on a house than run the risk of the property decreasing any further in value.
-
-
3
Gather statistics about the local housing market. Are real estate prices trending up or down? The greater the number of short sales and foreclosures in a neighborhood or community, the more incentive a lien holder has to sell a property to a qualified buyer.
-
4
Conduct a complete inspection and take note of deficiencies in a property that you can use to your advantage. For example, if extensive repairs need to be done on a house, get an estimate for the work and include it with your offer.
-
5
Ask for the name of the person who'll be reviewing your offer at the time you submit it. This will help you track the progress of the loan and give you a personal contact to follow up with if the loan is rejected.
-
6
Don’t give up if your first or even second offer is rejected. Make inquiries as to why the offer was turned down and modify your offer accordingly. Some mortgage companies base their bottom-line short sale figure on a percentage of the existing mortgage, so learning this information will give you more leverage and negotiating power.
-
1
Tips & Warnings
Just because a house is being sold as a short sale doesn’t mean you’re getting a special deal. Complete all due diligence and consider consulting with a real estate professional for additional advice. Buyers don't pay the commission of the real estate professional; payment comes from the seller's side.
Homes being sold as short sales may have been damaged or abandoned and are sold “as is.” Make sure you have a complete inspection conducted before you make an offer and again before you close to ensure that the property hasn’t been vandalized or otherwise compromised.
References
Resources
- Photo Credit David Sacks/Lifesize/Getty Images
