SHOULD YOU BUY A SHORT SALE?

When you spot a short sale home that interests you, take your hand off the mouse and step away from the computer. Before you get all excited over the prospect of buying that short sale house, pick up the phone and call me, a qualified real estate agent. We need to investigate how far the short sale process has evolved for the seller. Have they completed their paperwork? Are they motivated to negotiate an offer? Is the seller ready to move on? If the answers to these 3 important questions are yes, the next step is to view the home.
A short sale home is always sold “As IS’, meaning the condition you see the home in, is the condition you will be purchasing the home. You will have an opportunity to conduct a professional Home Inspection and if there are major repairs which are required ie: foundation or structural issues, you can cancel the contract.
Illinois taxes are one year behind the current year’s taxes. In 2013, we will be paying 2012 Real Estate taxes. Generally taxes go up and not down and during a normal real estate sale, taxes are pro-rated at 105 - 110% to adjust for the tax increase. However, banks do not want to pay any increase for property taxes so, the pro-rated tax will be at 100% up until close. You the buyer will be responsible for any tax increase.
The short sale has to be an arms length transaction. The home owner cannot have their relatives or neighbors purchase the home for them and rent it back to them. They have to move to a new home.
Be prepared to wait for a response from the lender. The bank usually has requested a BPO (Brokers Price Opinion) on the subject home from a Realtor or Appraiser. The bank already knows what price the home should sell at. They banks are not interested in low ball offers, they need to re-coup some of their money.
Most important, you the buyer should have a pre-approval letter from your lender or proof of funds if this is going to be a cash purchase. Many banks want the new buyer to occupy the home for a minimum of 12 months and have the buyer sign a statement agreeing to this condition. The only contingency which is allowed in the contract is a mortgage, no home sale.
Purchasing or Selling a Short Sale is complicated, please contact me for a confidential appointment. ~PAM