Of course this is just what WE did in 2009, who knows what it's like out there now, so you should really consult a professional...aren't I suppose to say that?
We bought a short sale. We knew we wanted to buy a short sale instead of having to go through the normal channels. That being said we could afford to do things a bit different. Mr. was on Redfin daily just looking at different neighborhoods in different cities. For probably a year before we bought he was doing research. While Mr. was a bit over the top, do your research on your neighborhoods. Look at the trends and how the houses in certain neighborhoods are doing. See what they are selling for. Keep an eye out in your favorite neighborhoods and wait for a house to go on the market as a short sale. And the biggest thing, don't be in a rush to move. Don't say...we have 4 months to move because our lease is up! We had sold our condo and were living in apartments, so when our lease was up we just went month to month and paid a slightly higher rate, which was worth it because getting out of lease was going to be way more than the extra $100 we were spending a month, for us it was just an extra month, so make the best decision for you and your situation. Maybe sign a 6 month lease if possible.
Try to have all of your ducks in a row. Meaning have a really good down payment, know what your budget is. Try and save up a good down payment, more than 20% if you can. Click here for part 1 and here for part 2 of my finances and how we do things around here. Be realistic about what you can afford, not what the bank is willing to give you. Seriously do the math.
Now that you are looking at short sales, a good down payment...ditch your real-estate agent. You're probably saying WHAT?! I know, I'm not crazy, but seriously I think this had a LOT to do with getting the house we did. Actually every single short sale saw sort of happened like this:
- We (and when I say we I really mean Mr.) found a short sale that he thought we would like he called the real estate agent on the listing directly
- He told said real estate agent that we didn't have an agent and that we would like to see the property.
- The agent...every single time...would bend over backwards to show us the house...why you might ask? Well he sees that we have no real estate agent therefore he's not going to have to share his commission with another agent, he's basically getting both sides of the deal. Score for him.
- He would always mention that we would probably be considered and at the top of the list if we wanted to put in an offer...reading between the lines, he's going to put us higher up on the stack of offers because we have no agent and he's getting both sides so he wants us to get the house so his commission is bigger, so he's going to push for us to get the deal.
Now that you've looked at several houses...and this one is going to be hard...don't get all emotionally attached to something. Do not make decisions based off of emotions, make a decision based off of facts and nothing else. If you start to put your emotions in, you're going to get in trouble and it's going to lead to a lot of heartache and more emotional stress than necessary. This is a business deal, you want something, they have something, don't let your emotions get the best of you. I know this is a hard one to swallow. But in the end if you think of it as a business deal, you'll be much better off, instead of thinking of it as...this is the house I'm going to bring my kids home to...or this is the house my kids are going to graduate in...just don't do it. Don't imagine what life is going to be like if you buy THIS house.
Shorts sales are tricky. They are super time consuming. We were lucky in the fact that our house while a short sale, was already in escrow with someone else when they're finances fell through, so everything had already been approved by the bank. We came along and offered the same as what they were going to offer, and they literally just switched our names for their names on all of the documents. So in the end our short sale only took 33 or so days. This is highly unusual, but we were prepared to go longer if necessary. Like I said in point 1, don't be in a rush to buy, this will also affect your emotions, if you are in a rush, you're going to possibly make a decision based off of that emotion of needing to find a place to live, so just don't put yourself in that situation. Mentally prepare for a long road ahead with a lot of waiting for the banks to say yes or no.
Good luck on buying your first home. It's a long, emotionally draining road, so be prepared and don't get emotionally involved! So those are my tips on how to buy a short sale. Have any questions? Just ask below or email me!
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