RESEARCH & LEARN

4 Steps to Purchasing a Short Sale


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TERMINOLOGY

Purchasing a short sale occurs when you buy a home for less than what the owner still owes on his or her mortgage. A short sale allows the existing homeowner the opportunity to sell their home at a discount price and avoid foreclosure.

Step 1 – Find a Short Sale Realtor

Since short sales are unlike traditional home sales, it is important to work with a licensed realtor who is familiar with the short sale process. Ask how you can become preapproved for the loan.

Step 2 – Research Short Sales

To find short sale properties, look at property information sheets with your realtor. If the sheet includes text saying that the offer must be approved by the lender or bank, it is most likely a short sale.

Step 3 – Make Your Offer

One difficult part of purchasing a short sale is that your offer should be close to the appraised value of the home. The bank generally does not tell the buyer the appraised value, however. The lender will reject your offer if they feel it does not meet the appraised value of the home.

Step 4 – Be Patient

If your offer was refused as too low, you may make a higher bid. Even with a higher bid, you can still get a good deal when purchasing a short sale, because many homes in today's market have a low appraisal value.