How To Buy A Short Sale Home

Monica has the opportunity to purchase a short sale home. Should she and her husband move forward with this or hold their breath until a foreclosure happens?

QUESTION: Monica in Dallas has the opportunity to purchase a short sale home. Should she and her husband move forward with this or hold their breath until a foreclosure happens? Dave tells Monica the only peril is getting drawn into the red tape of the process and the waiting period.

ANSWER: The only peril is that it takes so long and you get caught up into the red tape of the bureaucracy. The peril is the emotions. I want to lower your expectations that you’re ever going to live in that house. Then if the deal goes through, fine. The problem with a short sale is that the people in the mortgage company that are working short sales have stacks and stacks of files on their desks. They’re completely overworked. A percentage of them were incompetent to start with. Now they’re overworked and incompetent. The other percentage is just overworked.

I buy a lot of real estate. I made an offer on a short sale today, but will it go through? I have a very emotional tie to that because very few of them go through. It just takes so long for the bureaucracy of these companies to work this process through. When they finally get there, by then, you’ve just run out of patience.

Once they’ve actually foreclosed, it may go a completely different route. They may list it with a real estate agent. I’ve had better luck buying from banks than I have with short sales. The banks are so loaded up with real estate right now that if you can find one that’s already been foreclosed on, they really want it off the books.

It sounds like you need to get your house sold. What if they took it, and your house doesn’t sell? They won’t take a contingency contract on a short sale. You could put it in, but now you’ve just about killed the deal. Usually, another offer will come in on top of you, and they’ll work both of them. I just want you to be very careful that if all of your dreams come true, they don’t turn into a nightmare. You’ve got to talk through all of the different combinations, and only do the deal if you have all of the scenarios covered. If I’m going to go through all of this crap, I’m getting a deal.