By preparing for a real estate short sale, you can emerge with a great home at a favorable price.
 
1. Get help from a short sale expert
A real estate agent experienced in short sales can identify which homes are
being offered as short sales, help you determine a purchase price, and advise
you on what to include in your offer to make the lender view it favorably. Ask
agents how many buyers they've represented in short sales and, of those, how
many successfully closed the transaction.


2. Build a team
Ask agents to recommend real estate attorneys knowledgeable in short sales
and title experts. A title officer can do a title search to identify all the
liens attached to a property you’re interested in. Because each lienholder must
consent to a short sale, a property with multiple liens, like first and second
mortgages, mechanic’s and condominium liens, or homeowners association liens,
will be harder to purchase.

A title search may cost $250 to $300 up
front, but it can help weed out less desirable properties requiring multiple
approvals.

 3. Know the home’s fair market value
By agreeing to a short sale, lenders are consenting to lose money on the loan
they made to the sellers to purchase the home. Their goal is to keep those
losses as low as possible. If your offer is dramatically less than the home’s
fair market value, it may be rejected. Your agent can help you identify the
price that’s good for you. The lender will determine whether approval is in its
best interest.

 4. Expect delays
There are two stages to a short sale. First, the sellers must consent to your
purchase offer. Then they must submit it to their lender, along with
documentation to convince the lender to agree to the sale.

The lender
approval process can take weeks or months, even longer if the lender
counteroffers. Expect bigger delays if several lienholders are involved; each
can make a counteroffer or reject your offer.


5. Firm up your financing
Lenders will weigh your ability to close the transaction. If you're
preapproved for a mortgage, have a large downpayment, and can close at any time,
they’ll consider your offer stronger than that of a buyer whose financing is
less secure.


6. Avoid contingencies
If you must sell your current home before you can close on the short-sale
property, or you need to close by a firm deadline, your offer may present too
many moving parts for a lender to approve it.

Also, consider ordering an
inspection so you’re fully informed about the home. Keep in mind that lenders
are unlikely to approve an offer seeking repairs or credits for such work.
You’ll probably have to purchase the home “as is,” which means in its present
condition.

This article includes general information about tax laws
and consequences, but isn't intended to be relied upon by readers as tax or
legal advice applicable to particular transactions or circumstances. Consult a
tax professional for such advice; tax laws may vary by jurisdiction.