Buying a short sale or foreclosure (it's not that scary)

Buying a short sale or foreclosure can be a great way to get an excellent price, sometimes great value too.

Probably the most important part of purchasing a short sale or foreclosure is to keep in mind that the sale is not done until the closing table, a lot of things could happen and sometimes they do, so keep an open mind.

You may have to write more than one contract before you are able to make a property match that goes under contract successfully.

Working with an experienced agent here can give you a very clear advantage as they will be able to spot a lot of the short sales that might not go anywhere and give you clear ways to give you an advantage when presenting an offer to the bank as a foreclosure.

There is a very clear difference between buying a foreclosure and short sale.

On a short sale the owner of record is still responsible for making the sale happen; they should qualify to be able to make the short sale in the first place and once they have an offer they will present it to the lender(s) and try to negotiate an agreement.  The price listed on a short sale listing does not necessarily mean that this is the price that the bank will accept as the bank will usually still have to do their research on the price and condition; they have never seen the property.  The terms of the sale will usually be “as-is”.  Once the lender(s) approve the sale the buyer has to usually close the transaction within a quick time-frame so the buyer should be ready at all times, although sometimes the waiting period can be a few months.  The owner of the property must still sign all the documents to make the closing happen, even if the lender(s) approve the short sale and then the owner decides not to sign the paperwork to make the sale this property will not close.

On a foreclosure the property has already been acquired by the lender so it is bank owned  or an REO.  Here the price that you see should let you purchase the property, if there is competition prices sometimes can go over the asking price but this is because sometimes foreclosures are priced to sell very quickly.  All foreclosures are “as-is”.  Sometimes people ask about purchasing properties from the banks directly; usually this is not only very difficult but almost impossible as all properties are marketed through Realtors and go on the market as any other property.  Usually the bank will want to close the transaction as quickly as possible from the acceptance date.  Usually the bank will send you their own contract or contract rider that could be several pages; you must agree to their terms or you will not be buying that property.

Something to keep in mind is to not focus entirely in short sales and foreclosures, good values on properties come in many different shapes such as relocation sales, estate sales, or even regular sales that are just priced very well to sell in the current market.  

Patience is key in short sales and expedient due diligence in foreclosures.

Santiago Valdez|Realtor® CDPE—Certified Distressed Property Expert
RE/MAX Signature North|5135 N. Ravenswood|Chicago, IL 60640
cell 773.858.2410|office 773.290.6134|fax 800.627.0132
email Santiago@Chicago773.com | website www.MainChicago.com

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