How to Buy a Madbury New Hampshire Short Sale
If you are buying a home and want the best "deal" in the purchase of Madbury NH real estate a "short sale may be your best option. The process of finding and buying a short sale is not a typical real estate transaction. To have success, hire experienced professionals that understand all aspects of the transaction. Expert advice can be provided by real estate agents, attorneys, mortgage brokers or bankers and home inspector.
A Short Sale Defined
Homeowners that have financial hardships may pursue a Madbury short sale prior to foreclosure. This process may be a preferable option to preserve their credit and limit their debt exposure. NH law often presents the lender with incentives to offer the homeowner other alternatives. The lender understands the market and the expense involved in foreclosing on property. Under the Home Affordable Alternatives Program (HAFA) offered in 2010 by the Treasury Department, lenders and homeowners have additional incentives to consider a short sale.
The first step to a successful transaction requires the negotiation of an acceptable contract with the Seller subject to lender approval with no guarantees that your offer will be approved. If the contract is not acceptable to the lender then the Seller may not have sufficient time to sell to another party and avoid foreclosure. The following tips will increase your chances of negotiating a successful short sale transaction.
Are You a Qualified Buyer?
As a home buyer you must provide evidence that you qualify to purchase the property. The Seller is not likely to accept your offer without a valid credit approval as the lender will reject the contract. Get pre-approved from a reputable lender or if a cash buyer provide proof of funds. The approval must not contain conditions such as selling an existing property.
Pre-Qualify the Listing
Sellers selling short typically have a time-line they must meet to avoid foreclosure. If they have not communicated with their lender(s) and started the process, it may not be possible to close before foreclosure. As your real estate agent, I can identify properties that you may consider. To preview available short sales and foreclosures go to Madbury homes for sale. Information I will obtain includes:
Is the seller's short sale package prepared for submission to the lender?
Does the property have multiple liens? If more than one, what are they?
Is there a plan to obtain releases from all the lien-holders?
If you pursue a property that is not "short sale ready" you may be restricted from buying other properties of interest.
Negotiating the Offer
The first step is to have your offer accepted by the Seller and you will be competing against other buyers. Some real estate agents market the property substantially below market value to entice buyers. Others offer the property at the low end of fair market value. Price, terms and your qualifications will be the deciding factors for Seller acceptance. Sellers and lenders prefer offers with fewer contingencies.
- Earnest Money - Sellers may be hesitant to accept your offer with a low deposit. Buyers can easily "walk away" from a contract with low deposits. If you are serious about buying the property offer the Seller a strong deposit.
- Home Inspection - be prepared to invest the time and money in the home inspection prior to lender approval. A seller may not want to take the risk of conducting the inspection after lender approval. If they do, they risk losing the buyer on the inspection issues and will not have time to sell the property prior to foreclosure.
- Flexible Closing Date - Lenders often approve short sales with quick closings. You must be prepared to meet their conditions if you want to consummate the sale.
- Subsequent Offers -As a rule, real estate agents must present all offers. A contract with a higher sales price may have a better chance at being approved by the lender. The lender will give the Seller direction as to submitting additional offers. Also, be prepared to lock your interest rate thru closing so that your mortgage commitment will be valid.
Lenders will do their "due diligence" to substantiate the value of the property and have no set formula to determine an acceptable price for the property. However, Freddie Mac (one of the largest secondary market lenders) has a value range of 88% of one or more broker price opinions (BOP). Have realistic expectations of the time-frame for approval as it may take between 30-180 days and property values can change. If the lender and the Seller are participating in the HAFA program, these timelines will be streamlined for a quicker response.
Virtual Homes Real Estate agents can assist you with Madbury short sales, foreclosures and MLS listings currently on the market. Please call us at 800-856-2479.