It is not uncommon to see a price listing for a home that you consider too low for the neighborhood. You must know that buyers follow short sales to get a superior deal. Before you agree to that low price you should find out from your agents if the home is a short sale. Making an offer on a short sale, pre-foreclosure home is not unheard of but you must know the factors working behind it. There are many cases of Minnesota real estate buyers and Minneapolis short sale buys that I personally encountered where buyers had to wait up to six months even to close on a short sale.
A short sale is the lender accepting a discount payoff in order to free a debtor of a prevalent mortgage. Having a property listed with short sale terms means that even if the seller accepts your terms, the lender may or may not accept this offer. Be aware that the seller need not be in default to have stopped making mortgage payments before a lender will consider a short sale. A lender may consider a short sale if the seller is current but the value has fallen. The seller may have over-encumbered, owe more than the home is worth, so a discounted price might bring the price in line with market value, not below it. The lender is basically the one paying out the commission regardless of the commission the seller has said to pay. The seller is not getting any money with which they can pay a commission. The lender will most likely discuss the commission directly with the listing real estate broker since he is losing money, then talk about who will share the commission with the agent. Obtaining a home inspection is extremely important for the buyer and you will also need to pay up for other kinds of inspections.
Normally lenders will not agree to such a sale unless the seller is able to repay the deficiency of your sales price and the existing loans. Most sellers will also be asked to provide a hardship letter. The amount of debt is forgiven but the sellers may owe some pending taxes. The lender will need a time frame from you in which to respond and following that you will be allowed to cancel. The paperwork can sit on someone’s desk if the lender is under no pressure to make a decision.
You should do a little research on your own before making a purchase offer. A real estate agent can figure out more information on the lender and give you enough facts to decide on what kind of offer to make. You should make sure you get an agent with short sale experience that will benefit you. It’s makes matters much worse if your agent has no experience in that area. An experienced agent will make efforts to protect your interests and accelerate your transaction. You will require someone who can manage timely and regular follow ups on your behalf.