Many of today's buyers are opting to take advantage of getting a "deal" on a short sale, now I previously wrote a blog explaining the process of buying a short sale. I want to take a moment to explain a bit further not the process but what you should expect to see, and how you can prepare yourself for looking at these homes. If you are looking for information on the process please refer to this blog.
So you have decided your going to get a deal, and you are on the lookout for that home you can steal off the market. Well let me prepare you a little bit for what you may walk into, remember these homes are often time distressed or abandoned.
Before you even start looking at short sales you must remember a few important points.
- There is still a homeowner involved even if they have abandoned the home, unless they have made other arrangements they first have the right to accept or reject your offer.
- You have the right to have a home inspection performed on the house, but that is as far as it will go there will be no repairs made to the home.
- Anyone looking into a short sale should also become educated on a what a rehab loan is, some of these homes will not be mortgageable and will require a rehab loan.
- "Sold As Is" means just that, many people assume that it just means that no repairs will be made but it also means that any CO issues the home may have not and will not be addressed.
If that hasn't scared you off from purchasing a short sale, let me give you some reassurance. Not all short sales are in bad shape and/or have CO issues. Most of our short sales that are coming onto the market are actually still being lived in by the homeowner so let me prepare you a bit more.
- As I said earlier the homeowner still has the right to negotiate before any offer gets submitted to the bank, the chances of "stealing" one of these homes are slim because the bank will want at least 96% of what the market value is, and the homeowner will want the process to go as quickly and smoothly as possible so submitting a low offer would do nothing but waste everyone time.
- Not every homeowner will be happy that their home is for sale, and to be quite honest some of them will be flat out rude to you. Don't take it personal, and do not rush out on their account take your time and look the same as you would if the homeowner was being nice. Sometimes getting into these homes can be a bit more difficult so you want to make sure you see everything while you are there.
Those that are well versed in DIY projects, or who have family in construction are the most likely buyers to purchase and mortgage a distressed property. When you are going out to these homes there are a few important things you should really be prepared for, and this is the most important part of this blog, remember this is specifically for vacant distressed homes.
- Ladies, this first one is for you and I speak from experience when I am saying this. DO NOT wear heals/skirts/open shoes when you are going out to look at these homes. Even in this heat I would recommend wearing jeans or long capris rather than shorts. Some of these homes have been vandalized and their could be glass, or debris laying around and worst case there can be mold in some of the areas of the house or exposed insulation that can irritate your skin.
- Bring your flashlights and be prepared to use them, even on the sunniest day these homes can be eerily dark. Most of the time this is caused by the boarded up windows, and doors but the lack of electricity at night is always an issue. You will also want to consider bringing some hand sanitizer, some of these houses can be a bit on the dirty size so if you are anything like me you will be very happy to clean up a bit after being inside.
- View these homes during "normal" hours, this is all about your safety. You will have to use flashlights to see and your site will be way to limited in the evening hours. There is no way to know if squatters have been using this home for a warm place to sleep, and viewing these homes in the late evening hours is just not safe.
- NEVER close the door behind your agent, again this is all about your safety as well as your brokers, you never know what your walking into. By leaving the front door open you are making it clear to those neighbors and other agents who may be showing that you are in the house, and they will be able to hear you inside god forbid something is to happen.
Now I know that all that may make you think it is not worth looking at short sales at all, but it is rare to see homes in this extreme distress anymore. It is much more typical that the homes are still being lived in or taken care of by neighbors but I have quite a few buyers who are looking for this kind of project coming to me over the passed few weeks. The best way to find the short sale that is right for you is to talk open and honestly with your agent, here are a two easy ways we can help you before you even step foot into one of these homes.
- As brokers we have access to things that you do not, if you would not consider a home that would require a rehab loan we have the ability to check the agent listing to see if the home would require one or not before you go and look at it.
- Many of these short sales will not have pictures attached to the listing, don't discount them just based on that if you are nervous about seeing these vacant homes because you would only want to do cosmetic work, see if your agent would be willing to preview them for you.
The best piece of advice I could give you when your buying a short sale is to expect the unexpected ! Short sales are not for everyone. The good news is that we are not seeing any large amount of short sales coming onto the market at the rate they were in previous years, and we are slowly seeing these homes sold !
If you are looking for additional information regarding the purchase of a short sale property and have additional questions were not covered in this blog please feel free to leave your question as a comment, or email me directly!