Yes I believe you can but you must understand what you are getting yourself into as a buyer. It is true that most of the burden falls on the listing agent and the sellers but that does not mean that the agent that represents the buyer can’t do some homework to improve the odds of putting together a successful transaction.
Before a buyer decides to move forward with the purchase of a short sale or a foreclosure there are a few things that need to be said. Most people believe that a short sale or a foreclosure home is a great deal. I think that is a fair statement to make but to get a deal you have to be willing to do what many others are not willing to do to get it. Mainly you have to be ready to be very, very patient. This above all is the most important thing that you can do to make this purchase come together. So many buyers get within days of bank approval and give up because they can’t wait any longer. I think that is why the 1st buyer to write an offer on a short sale is not the buyer who ends up with the home.
Where the buyers agent can help is by asking several questions of the listing agent before the decision is made to write an offer. One thing I want to say about this is I do not believe there is such a thing as a pre-negotiated short sale. The reason being is a bank can agree that a seller can try to short sale the property they are in, but I have yet to come across a bank that is willing to agree to it before there is a written offer on the table. On top of that they want every last detail regarding the current financial situation of what is owed, right down to the water bill. Because these transactions can take longer those amounts can change so they are always requesting updates. Then when they agree to the short sale, the letter usually has a 30 day expiration date that you have to close by or they will want all new information.
Here are some questions the buyer agent should be asking on the buyers behalf.
- How many loans are on the property? The more loans there are the harder it will be to get the short sale approved.
- Who are the banks that are involved? Some banks are notoriously problematic with short sales and there are a few you want to avoid.
- Are there any other liens on the property? Everyone who has a lien on the property, has to get paid. This can become a problem if you don't know about it upfront.
- Has title work been pulled on the property? We want to verify that the information the listing agent is sharing with us is correct from the county records, not what the sellers believe is correct.
- Are there any offers on the property at this time? Will this turn into a multiple offer situation, you need to know ahead of time
- Were there any offers that have fallen apart? This can sometimes give you an indication of trouble to come. Did the bank already turn one down?
- Have you sent in the beginning paperwork to start the short sale? We want to know if the agent has actually started the short sale process. If they have not this can add three months to the waiting time.
- Is the seller currently trying to modify their loan? If they are, then they can't short sale the house until that process is complete.
- When is the sheriff’s sale? If the sheriff sale has already happened it shortens the window to get the short sale approved.
- Has the bank done it’s initial BPO (Buyers Price Opinion)? This will tell you how far into the short sale process the bank is.
- Has the 1st loan shared their time line with you? Some banks will actually set up expectations with the sellers to let them know about how long the process will take.
- Have you worked with this bank before? Sometimes working with the listing agent who has a history with the bank makes the short sell go a lot quicker and smoother.
- What paperwork do you include in the package you send to the bank? This will give me an indication as to how much the listing agent really knows about the short sale process. If the listing agent doesn't do their job, this sale will never happen.
The reason these are important questions is that it gives the buyer and the agent some insight into that particular property. If the listing agent can’t answer these questions or at the very least a reasonable percentage of them, you may want to consider not moving forward and looking for a different home. The buyer agent should always try to verify as much information as they can through the tax records before they ask these questions.