- The seller needs to know that they've gotten out of a bad situation with less credit damage and a new start.
- The buyer wants to make a purchase of a property below the true market value, at least in the near future.
- The lender must believe that the short sale will net them more money than a foreclosure action.
If we're the buyer, then our interests are best served by a purchase at the lowest possible price that will be approved by the lender. The seller gets no cash, so we are just showing them a way out of a foreclosure action.
Here's what you're looking for as the buyer in a short sale transaction:
- A homeowner upside-down in their loan. Their home is worth less than they owe on it in various mortgages.
- Clear title and no prohibitive liens or claims against the property.
- Enough time to complete the process before foreclosure action.
- A willing seller with a desire to help in order to avoid foreclosure.
- A current valuation that will allow you to buy the home at a bargain price, creating instant equity.
- True hardship on the part of the seller to convince the lender of the necessity of a short sale.
- If VA or FHA, the situation meets their criteria for short sale.
In short, you are looking for a homeowner owing more on their home than they can get in a sale, and a situation where the lender will approve a purchase price that meets your investment goals.
