With short sale transactions becoming increasingly prevalent as a way of liquidating real estate, many buyers are getting fantastic opportunities to purchase property at unbelievable prices. While the deals are coming around, far too many of these are lost during escrow. The biggest cause of this is the inability of the new lender to fund the loan within the deadline approved by the bank holding the loan and taking the loss. If you haven't already, you may want to familiarize yourself with short sales using this handy guide to foreclosure real estate.
Here's how it can work. If the lender who will need to approve the short sale grants permission to carry out a short pay transaction, they will outline a time period for approval of the sale including a definitive deadline. The process of being assigned a negotiator, ordering a broker price opinion, and ultimately approving the sale is slow to say the least. As a short sale home buyer, one really only wants to go through this process once on a single property.
Failure to fund the loan and close the transaction in accordance with the banks window for sale approval can cause everybody to have to start over again. Let's say the sale was scheduled to close on the 3rd of the month. If the loan doesn't fund until the 4th or 5th, the entire file may have to be resubmitted, reassigned, and renegotiated. None of these situations are what we would describe as pleasurable.
So how do we ensure that a short sale closes on time? Here is the best things a potential short sale buyer can do:
- Start by getting pre-approval from the lender as soon as possible
- Attempt to negotiate a close date that will be a few days before the lenders time window closes
- Complete all paperwork you receive from lender and escrow company as soon as possible
- Complete all inspections and due diligence as soon as possible
- Do not wait till the last minute to lock in a loan in an attempt to predict the lowest possible interest rate
- Submit all documentation required by the lender as quickly as possible
- If delays come up that will prevent closing, notify the bank taking loss well ahead of time and request an extension
- If deadline comes and goes without closing, ask bank taking loss to keep the file open with same negotiator
Losing an incredible deal at the last minute can be an unbelievably stressful situation for any home buyer. One can decrease the chances of this happening to them by using the list above. Here's to not letting opportunities pass us by!