A short sale, one in which the lender agrees to take less for a house than is owed on the outstanding mortgage, is a complicated dance between an owner, his agent, the buyer, his agent and the lender or the lender's asset manager who in turn will communicate with the lender. With so many levels of approval on the line, working with real estate agents who are short sale certified, and presenting an offer that's clean, attractive and without excessive contingencies, are the best ways to expedite a short sale.
Verify that the seller's agent and yours are short-sale certified and know the paperwork and the specific bank that are involved in the process. Be sure your agent confirms that the seller’s agent has the seller’s financial information ready to be submitted with your offer, along with the executed documents the lender requires. Clarify that the seller’s agent is familiar with state- and federally-mandated short sale terms of approval and keep a timeline.
Submit a purchase contract at a price that is at or slightly above current market conditions, not asking price, for a short sale. Attach comparables explaining your reason for the price you’ve offered. Include your mortgage pre-approval letter. Do not make the offer less than 84 percent of the listing price if you want a response from the lender, and be aware that a bidding war on a popular property may increase the selling price above the asking price. Check with the seller’s agent that there are no additional liens or mortgages on the property, as this extends the closing period.
Write an initial deposit check and agree to increase it when the lender gives his approval on your purchase. Use financial contingencies with reasonable rates and time frames. Show that your lender will agree to an extension if the paperwork is not completed during the period your loan is approved for.
Ask your agent to monitor all the paperwork that’s been submitted with the seller’s agent and to get confirmation from the asset manager or lender that all the paperwork has been received. Be sure that the lender isn’t dual tracking the sale, meaning the lender has also filed paperwork instituting a foreclosure.
Agree to pay an outstanding lien against the property, only if it’s a small amount and if the property warrants this further investment in order to expedite the closing. Be flexible with closing dates, but once it’s set with the lender, don’t change it.
Have the home inspected prior to making your offer, for your information only. Do not expect the lender or seller to make any repairs or credit you with their costs. Have termite and living organism tests performed as there’s a slight chance the lender will agree to remediation of these findings.
- Creatas/Creatas/Getty Images