Until a few years ago, short sales were a rarity. However, they're more popular now than ever, and it appears they will continue to be popular for several years. Bargain hunters usually encounter more than one short sale on the market.

It's possible to save more than 20% by taking advantage of this type of sale. Although this option might seem attractive, it's important to be aware that short sales are also complicated to close on. Getting an offer accepted is the first and most difficult task. Since these transactions are difficult and lengthy, it's important to work with an agent who is knowledgeable about short sales.

Short sales are used by owners who are unable to meet their monthly mortgage payments. The lender agrees to release the lien on the property, take a loss and collect the proceeds from the property's sale. Since short sales are a much brighter option for homeowners than foreclosure, many are choosing this path today. Lenders, while reluctant to lose money, understand that this option is still less expensive for them than foreclosure. Foreclosure volumes have risen significantly and are expected to continue to rise in the future.

Although short sales are rising in popularity, they're still difficult to finish. Completing a short sale takes persistence, patience and the help of an experienced agent. Communication is one of the most critical issues. However, there are several other issues. For those who are willing to give a short sale a try, it's important to consider the following six steps for improving chances of successful completion:
  1. Ensure credit is good and get pre-qualified.

    Many people who use short sales are investors. They usually have the cash on hand to pay for the property. Lenders see this as an enticing no-risk transaction. In order to compete with these powerful investors, be sure credit scores and history reports are perfect. Get a pre-qualification letter from a reputable lender. Avoid using credit cards after obtaining pre-qualification. Be sure to make credit payments on time until the day the transaction closes.

  2. Make an offer with a promise to deposit funds in a trust account.

    Although $1,000 is a common amount to put down in many home sales, it's best to offer between 1% and 3% of the sale price. This shows sellers an offer that is both enticing and serious.

  3. Research pricing for similar short sales.

    Keep in mind that some advertised properties are listed far below their value simply to entice buyers. Be sure to call a reputable agent to see what the properties are currently listed at. Most banks approve short sales that are less than 10% under market value. The listing agent is also able to advise if there are any other offers on the property. If there are other offers, it might be necessary to offer a higher amount.

  4. Be sure the agent has good software.

    Although many agents claim to be experienced in short sales, not all of them operate with the latest software to assist in the short sale process. Equator is one of the best software programs. This electronic tool helps the agent with documents, tracking, communication, reporting and several other aspects of completing a short sale.

  5. Shorten the inspection contingency period.

    Try to line up two or three inspectors in advance. This will cut the contingency period in half. Contingency periods normally last from 14 to 30 days. Sellers are more likely to accept an offer if they know the closing time can be shortened.

  6. Maintain patience throughout the process.

    Without patience, it's impossible to complete a short sale. It's also important to convey patience to the seller and other parties involved.
The process of a short sale is worth the time and effort for those who want a great deal on a home. Although it's a tedious process, the home is also much more likely to be in better shape. The end result is much better than buying a foreclosed home that has been sitting vacant for a long period of time. Be sure to contact a reliable agent when considering this type of purchase.
Need insurance for You, Your Family or Your Business?
We can match you to a qualified, local insurance expert!
Further Reading
Short-Term Care Insurance (STCI) can help pay for your medical care in an assisted-living facility or nursing home for a relatively short period (90 to 360 days) during recovery, convalescence, or recuperation when you can't take care of yourself ...
If disaster strikes your business, how you respond, and how the public perceives this response, can have a significant and lasting impact. A poorly handled reaction will damage your reputation, lead to lost customers and sales, and even trigger li...
The point in time when you didn't need insurance for your business was when it was just you, on a laptop, in your garage, and you hadn't even launched your first product yet. As soon as you've seen any sort of success in your industry, liability, lit...
Japan's earthquake and tsunami should be a loud and clear wake-up call for those unprepared for a natural disaster. Whether it's an earthquake, tornado, fire, hurricane, flood, or terrorist act, history shows that no one is im...
Rose Lee Cardenas v. Fanaian, DDS, Inc. In August 2009, Rosa Lee Cardenas began working as a dental hygienist for a local dentist in Reedley, CA. According to the Facts of the Case:  “In celebration of their 25th wedding anniversary ...