The document discusses key points for buyers to understand when purchasing a short sale property. It notes that short sales can take 60-90 days to get approved, unlike a normal sale. It also explains that short sales will likely be sold at a discount to market value, but not 40-50% below like some assume. Additionally, it emphasizes that short sales require experienced real estate agents due to their complex nature.

1. Are You a Buyer Looking to Purchase a Short Sale? http://www.kcmblog.com/2012/05/08/looking-to-buy-a-short-sale/
Blog
What is KCM?
Our Mission
Contact Us
Are You a Buyer Looking to Purchase a Short Sale?
by Brandon Brittingham on May 8, 2012 · 7 comments
Tweet 256
Share 1016
Share 139
15
1 of 8 6/26/2012 11:04 AM

2. Are You a Buyer Looking to Purchase a Short Sale? http://www.kcmblog.com/2012/05/08/looking-to-buy-a-short-sale/
It seems that there is a significant amount of confusion
when it comes to purchasing a short sale. There are many misconceptions when it comes to this type of
transaction, so below I have provided some information to potential buyers of short sales. If you are looking
to purchase a short sale, understand that it is not the same as a normal sale and the approach is very different.
There could be several parties involved and issues that are unknown to the buyer and buyer’s agent that can
affect the transaction. If you are looking to purchase a short sale here is some helpful information.
1. On average, to get a short sale approval, it can take 60-90 days.
There could be mortgage insurance and an end investor on the loan as well as the servicer, which means it has
to go through three different processes. Bank of America could be the servicer on the loan but they do not
actually own the loan, so, the short sale has to pass their guidelines, then go to the mortgage insurer if there is
one, then to the end investor like Fannie Mae and Freddie Mac. If you are a buyer and can’t wait at least
60-90 days for an approval and then another 30 days to go to closing, then you need to look at other houses.
The worst thing you can do is tie up a house that is in a short sale with no intention of being patient while
waiting for a short sale approval. Approvals can come sooner than 60 days, but industry standard is at least 60
days to get an approval or denial.
2. There is a general assumption that you can purchase a short sale for 40-50% under its listed price.
In a short sale the bank comes out and does a valuation of the property and will expect a slight
discount, but will not accept a huge amount under the market value.
Hopefully, if the agent who is handling the sale is experienced, they will have already gotten an approved list
price from the bank by the time you are interested in making an offer. The bank will usually be willing to
negotiate on that price, but will not, in almost every case, take 40-50% off of that price. To that point, you
may be able to get a reasonable deal on a short sale, though it will not be, in most cases, as much of a deal as
you may be able to get on an REO (foreclosed property). Also to that point, most short sales will be in better
condition than an REO. When you look at the potential repairs a comparable REO needs and the time and
expense it can take to do those improvements vs. a short sale being sold at a slight market discount with
improvements already made, the investment could even out. There are REO properties that can be picked up
for a huge discount, but require massive repairs that a comparable short sale may not require.
3. Short sales are a very difficult process and it takes a qualified person to handle this type of
transaction.
With this type of transaction it takes a very experienced agent on the listing side as well as the buying side.
Make sure before you move forward on the transaction that the listing agent has ample experience dealing
with these types of transactions, or you could be tied up in a contract for months that never goes to
settlement. There are several different types of short sale processes and each bank’s process is somewhat
different; it takes a professional who has had experience with all of these different types of short sales to help
2 of 8 6/26/2012 11:04 AM

3. Are You a Buyer Looking to Purchase a Short Sale? http://www.kcmblog.com/2012/05/08/looking-to-buy-a-short-sale/
facilitate a successful transaction.
4. In most short sale transactions the properties are sold “as-is” and no repairs will be made.
Although there are some exceptions to this rule, speaking in general, short sales are sold “as-is” and no repairs
will be made even if they are found during a home inspection. In most short sale transactions the bank will
require both the buyer and the seller to sign an addendum that states the property is being sold “As-is” and no
repairs will be made.
These are just a few short pointers for buyers who are looking to purchase a short sale as they are a reality in
every market, and if you have the patience you may be able to get the home you are looking for at a discount!
15 1016 256
Share Tweet
About The Author
Brandon Brittingham is considered a leading national resource on foreclosure prevention and short sales.
Brandon has been involved in over 400 short sales, and is the co-author of the SSC (Short Sale Certified)
designation. Brandon has trained over 2000 real estate agents nationwide on short sales and how to help
homeowners prevent foreclosure. He has worked with several major lenders to help them develop processes
to streamline their short sale and loan modification processes, and has been a Regional Top producer in his
area for the last three years and was recently acknowledged by Realty Alliance for being in the top 5% of
realtors in North America.
3 of 8 6/26/2012 11:04 AM

4. Are You a Buyer Looking to Purchase a Short Sale? http://www.kcmblog.com/2012/05/08/looking-to-buy-a-short-sale/
7 comments •
Discussion Community "
TR • 2 months ago
The biggest concern for buyers and their agents when approaching a short sale IS
Making sure the seller, their broker and or the seller's negotiator KNOW what they are trying to do and
the property actually has a chance of going SHORT ! So much time wasted due to property not being set
up right in the first place. We try hard to qualify the listing from the buyer side prior to really even
considering it. Most short offerings still today in our market are just "blind auctions" or "price drop
trolling", BE CAREFUL. Short sales are challenging, more are coming - so do not always believe what
the listing says. Ask the listing agent questions
What kind of short ?
how has the seller qualified ?
Do they have a listing package to the bank ?
Do they know who is on title and mortgage ?
If they cant or will not answer these basic questions, take your buyer and run - otherwise buy a large
bottle of aspirin and hold on for the Sideways !
Try to get 3rd party authorized from the seller on the BUYER side.
TR
2 • Reply • Share ›
TLC • 2 months ago
I have found that depending on the type of loan and who the lender is the BPO/Appraisal will not
be ordered until you have a sales contract. You should be listing short sales just under market value and
then adjusted for any repairs that must be done. If you're not getting much traffic on line and off then drop
the list price monthly just make sure you send the lender the traffic history once a contract is received
along with the list of repairs if any with price quotes. As long as you can justify the sales price you have
a good chance of an approval or a counter price that is reasonable.
1 • Reply • Share ›
Rogervining • 2 months ago
Timely subject. many listing agents of short sales usually list at a lo ball price just to get a bid to
submit to the bank so it is better to see one thats been on the market a while or call every listing agent of
a short sale to see if bank has agreed to a listing price BEFORE wasting buyers and Realtors time.
1 • Reply • Share ›
Shanna • a month ago
Do you happen to have any statistics about the % of short sales going through that are in
4 of 8 6/26/2012 11:04 AM

5. Are You a Buyer Looking to Purchase a Short Sale? http://www.kcmblog.com/2012/05/08/looking-to-buy-a-short-sale/
Previous post: Short Sales Will Increase Dramatically in 2012
Next post: Short Sale vs Foreclosure – 10 Common Myths Busted
Search For Posts
Popular Posts
Short Sale vs Foreclosure – 10 Common Myths Busted
Will Mortgage Forgiveness Debt Relief Act Be Extended?
The Unspoken Appraisal Problem
Everybody Calm Down! The Sky Is NOT Falling
Home Prices: It’s About Supply & Demand
New Single Family Homes: 2011 vs 2006
Another Positive Report for Real Estate
Want More Articles?
@KCMcrew on Twitter
tonymaurer Experts
Say Housing Prices Are
5 of 8 6/26/2012 11:04 AM

6. Are You a Buyer Looking to Purchase a Short Sale? http://www.kcmblog.com/2012/05/08/looking-to-buy-a-short-sale/
About to Turn ~
kcmblog.com/2012
/06/26/exp… via
@KCMcrew
4 hours ago reply retweet
favorite
CRSConnect
Infographic: Under-35
Population Staying
Home Not Buying One
ht.ly/bL2Bw via
@KCMcrew
3 days ago reply retweet
favorite
CDPE Which is Better:
A Rental or Your Own
Home? @KCMcrew
pinterest.com/pin
/2124433073…
4 days ago reply retweet
favorite
alexcharfen Great info
from Steve Harney!
#charfen @cdpe
@KCMcrew Short Sales
Skyrocketing
bit.ly/LyWIvS
6 days ago reply retweet
favorite
HoulihanRE "Shadow
Inventory" falls to
levels not seen since
2008 according to this
@KCMcrew article:
ow.ly/bGo8B
7 days ago reply retweet
favorite
Join the conversation
The SHI
SHI (shē) n. the spiral adopted by Keeping Current Matters that symbolizes the continuous change of
real estate and its current practices.
The KCM Connect
6 of 8 6/26/2012 11:04 AM

7. Are You a Buyer Looking to Purchase a Short Sale? http://www.kcmblog.com/2012/05/08/looking-to-buy-a-short-sale/
The KCM Crew
Like
12,675 people like The KCM
Crew.
John John Vance
Pati Camille Eileen
Jonathan Paul Bill
May 2012
M T W T F S S
1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31
« Apr Jun »
Archives
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
7 of 8 6/26/2012 11:04 AM

8. Are You a Buyer Looking to Purchase a Short Sale? http://www.kcmblog.com/2012/05/08/looking-to-buy-a-short-sale/
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
The KCM Crew on
+292
Like Pati Maez, John Coats and 12,673 others like this.
Copyright © 2012 Keeping Current Matters, All rights reserved
8 of 8 6/26/2012 11:04 AM