SHORT SALE BASICS FOR BUYERS

hort sales can represent excellent buying opportunities for certain purchasers. But short sales are quite different than traditional real estate transactions, and they've been known to frustrate and disappoint buyers who are unschooled in their complexities.

Five things short-sale buyers ought to know:

1. Short sales are almost never short, so to the patient buyer go the spoils. The process, from making an offer to the closing, can take anywhere from several weeks to more than a year.

The basic reasons for the delays are twofold: One, most lenders are awash in foreclosure and pre-foreclosure properties these days, and they're just not staffed to process these home sales in volume. Two, many real estate agents are not well trained in this complicated process.

2. Work with an agent who has a track record in short sales. These can be complex transactions with their own rules and etiquette, and they require knowledge of what's reasonable and customary. A good short sale practitioner is a specialist.

A common mistake is that inexperienced agents unknowingly submit incomplete files and wait for the bank to get back to them. But it doesn’t work that way. With hundreds of pre-foreclosure files on their desks, bank negotiators will simply push the most complete files to the head of the line and improperly documented files fall to the bottom of the stack.

3. Buyers need to impress lenders that they're serious. Buyers need a very strong preapproval letter from their lender with a solid financial package and proof of funds for their down payment, or cash.

Buyers also should invest in a thorough home inspection before making an offer. Once short sale approval is granted, buyers must be prepared to close.

4. Pricing is critical. The homeowner's listing price isn't necessarily a good guideline. And super-lowball offers frequently go nowhere. Short sales can represent great value for the right buyer, but lenders will generally only accept offers which are relatively close to their appraised value or BPO.

5. Be prepared to walk away. Short sales properties can be plagued with all kinds of ancillary issues. They can be encumbered with unpaid taxes or homeowner association liens, second mortgages with other lenders, municipal code violations, not to mention the financial circumstances of the seller. These contribute to the uncertainty of approval and closing delays. Short sale properties should only be considered by buyers with the patience and ability to deal with these unknowns.