What should i expect on a Short Sale property?

Question

Hello All,

I have personally never bought a Short Sale property before, but recently I have been searching for a new house to buy, because the place I am renting is possibly changing in the near future, requiring me to find somewhere else to live. I have a bit of money saved up that i was planning on using on another rental, but i have had poor luck with finding something that meets high enough returns in the current market as of lately. After searching and viewing a few properties and making lots of offers, i have come across a townhouse that in a short sale with an approved price of 155k, but similar properties in the section have been selling in the 180-185k range. Its been on the market for a while, so i keep seeing it listed on my searches, but not taken a look at the property because of the short sale tag.

My question is this. What are some essential things i should ask for or expect if i make an offer on the property? This property would turn into my new primary residence. I am highly thinking of house hacking it also, because its a 3/2 and I'm just solo by myself.

Since there is an approved number already, is it wrong for me to ask for a lesser amount, based on just looking at the pictures it needs some tlc like new carpet and paint.

Minna Reid · Answer

You could certainly present a lower offer, but if this was recently approved there probably wont be too much flexibility. If it was in fact approved, there would have been a BPO or appraisal done and once those values are established they are usually good for a few months.  Won't know until you ask for more details. As far as the purchase itself, from a buyer side perspective be prepared that even an approved short sale will still take a little while to get re-approved for a new buyer, so you'll have to exercise some patience. Also, you would want to do some basic homework on title, hoa fees, liens etc. If a mortgage isn't being paid, sometimes other things aren't getting paid either, and you will want to know all these issues have been addressed with the approval, or if not what the plan is for their payment.

Minna Reid · Answer

Because it makes no difference what he bought for in 2009. I bet he refinanced or took a second or did a loan mod or whatever. He owes more or it wouldn't be short. Approved prices have nothing to do what the original sales price was. Approved prices are based on a current market valuation of the property.

William Huston · Answer

@Minna Reid , Thank you for your reply. Just my knowledge of short sales is very very limited. I will check to see what has and has not been paid on the property, the part that confuses me is the county has the property last purchased for a total of 60K at an auction in 2009 by the same owners that are selling it, i even found out there other house which is a single family home is also in short sale at the moment, but at a far higher price range than im looking to buy at. So i am very confused why its even a short sale at the 155k "approved price".