It could have been worse.
Once we finally finished the purchase of our new home, and read more and more short sale horror stories, my wife and I took solace in that fact: It could have been worse.
Sure, after going through three months of surprise expenses, delays, shady real estate agent tactics, and riding the daily roller coaster of good news/bad news, it definitely didn’t feel like things could have gone worse. But they could have.
The good news is that after we caught our breath and looked around at our sparkling new home, it was easy to stop dwelling on the negatives.
We survived it. Buying a short sale home can be done. If you’re up for a challenge, great bargains can be had. As someone who’s been there, here are my seven top tips to help you make it a success.
1. Don’t do it
I’m only half kidding. Before you begin, make sure it’s really worth it to you.
Sit down and have a comprehensive conversation about the home. Is it the right location? Is it in decent condition, or are you prepared to deal with a home in poor condition? Do the size and layout work for you? Is it even a bargain? Your love for this house will be tested on a regular basis. You absolutely do not want to get several months into a short sale and realize it’s just not worth it anymore.
2. Expect delays
We were selling our first home while trying to buy our short sale home. I can’t imagine how much more stressful the situation could have been if we didn’t have such a flexible buyer.
There are endless delays. Sellers ask for more time. Banks reconsider their approval. Addendum items get argued over. It goes on and on. If a short sale puts the sale of your current home in jeopardy, or puts your family at risk of being without a place to live, then it’s not right for you.
3. Trust no one
Our home listing featured such gems as “pre-approved for quick closing” and “one percent closing costs allocated,” both of which turned out to be pipe dreams. We ran into a stunning lack of accountability from the listing agent. It sometimes feels like I’m describing a post-apocalyptic wasteland, but it’s true: Only trust yourself in a short sale.
4. Get scrappy
If you don’t go into a home search actively looking for short sale homes, there’s a good chance you’re not picking your realtor based on their short sale expertise. If you don’t have a short sale expert, you may need to provide some DIY assistance.
When the approval deadline looms and several different parties need to be wrangled, be prepared to send emails and make phone calls to apply pressure. Don’t be afraid to ask for progress reports, inquire about exactly what each party is waiting for, and see what you can do to get it.
Our deal reached a certain point where nothing was happening for some time, with the approval deadline quickly approaching. A simple email helped us figure out the bank was waiting for an updated approval letter from our lender. The holdup? No one from their office had asked for it. I shudder to think how long that standstill could have continued if we hadn’t sent an email and moved things along.
5. Count on surprise costs
Eleven days before our scheduled closing, an unexpected new lien popped up on our title check. Our options were unappealing. We could take legal action against what appeared to be an illegal lien, costing us cash and time (which would also cause the bank’s approval deadline to pass, meaning that process would have to start over) for an uncertain outcome. Or… we could just pay it. Ouch.
When buying a short-sale home, you’ll likely face your own version of the no-win situation at some point. Be ready for it.
6. Educate yourself
Our short sale experience wasn’t typical, because there is no typical short-sale experience. Your sale might be quick and easy. It might take a year. Knowledge is the one variable you can control. Education will allow you to know what to expect and to be better prepared to make the tough choices. Real estate, legal, and financial experts are available to help you through the process.
7. Don’t celebrate until you get the key
Make sure to insist on one final inspection of the home. One thing to keep in mind: Your bargain is the seller’s loss. Whatever the cause, they are leaving the house in a worse position than when they bought it. People with an axe to grind who feel like they have nothing to lose can sometimes make a mess on their way out.
Protect yourself by making sure the sellers don’t leave any housewarming gifts. No one wants to celebrate their new home by seeing toilets filled with concrete, wiring torn from the walls, or other such niceties.
Top Image Credit: Graciela Rutkowski Interiors
Would you buy a short sale home? What questions do you still have about trying it?
