So, You Want to Buy a Short Sale Property!

After dealing with a number of short sale scenarios over the past few years, I have learned one very key strategy for buyers. If you want it done in a timely fashion, be the second buyer in!

That's right, be the second buyer interested in the property and you will have a better chance of getting the deal done before everyone goes crazy with delays. Generally what happens is the listing agent puts the property out on the market hoping to generate an offer that they can take to the bank and hopefully get approval at the price and terms. And, if the offer is somewhat reasonable, the bank will "input" the offer into their system and process the offer.

The key word is process. It is most definitely a process. A long process! The buyer and the seller wait and wait and wait until the bank hopefully, maybe, might give them an answer. Now, here is the problem, the initial offer is a lot for the bank to digest. They have to go through the entire process of analyzing, appraising, bargaining, negotiating and more before they can get close to a decision. Remember, before this mess hit, banks were set up to do loans and foreclose. They don't have the staff and systems in place to service all these short sales. And in this economy they certainly do not want to hire more staff to service this money loosing business.

Usually what happens is the initial offer is "processed" for so long that the buyer throws up their hands after four, six, eight months and walks away from the deal. Now the property goes back on the market!

This is the time for the savvy buyer to strike! Most of the work by the bank is done. If they get another reasonable offer, the bank has done the appraisal, they have explored the market values, they have set up a file, they more than likely have a negotiator for the file, they are tired of the process also. The bank is now comfortable with the scenario and are ready to close.

As a buyer, it is very likely that you will be able to close an escrow in thirty days at this point. Of all the short sales that I have seen in our office, and that is many, I would hazard to guess that seventy five percent or more are closed to a second buyer after the first buyer gets frustrated and walks away.