How to Buy a Pelham New Hampshire Short Sale
If you are buying a home and want the best "deal" in the purchase of Pelham NH real estate you may consider a "short sale" as a viable option. The process of finding and buying a short sale is not a typical real estate transaction. To have success, you must work with qualified professionals and understand the process. Utilize the services of Realtors, attorneys, accountants, mortgage lenders and home inspectors as they all provide expert advice.
What is a Short Sale?
Homeowners in financial distress often consider various options, including a short sale, prior to foreclosure. This process may be a preferable option to preserve their credit and limit their debt exposure. In New Hampshire, the laws governing foreclosures provide incentives for lenders to work with homeowners that can no longer afford their homes. The foreclosure process takes time and money and may prove to be more costly to the lender. 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. Follow these guidelines to improve your chances of a buying and closing on a short sale listing:
You Must be Credit Approved
As a home buyer you must provide evidence that you qualify to purchase the property. The Seller is unable to accept your offer without a valid credit approval as the lender will not grant approval 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.
Finding Listings That Qualify
Homeowners in financial distress typically have a limited amount of time to find a qualified buyer. If they have not communicated with their lender(s) and started the process, it may not be possible to close before foreclosure. As your Realtor, I can pre-qualify a listing on your behalf. Information I will obtain includes:
- Has the homeowner compiled the necessary documents for the lender approval package?
- 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.
Offer and Acceptance by the Seller
The first step is to have your offer accepted by the Seller and you will be competing against other contracts. Real estate agents often list the property at a low value to encourage multiple offers. Others price the property at the low end of fair market value. The terms and conditions of your offer can be as important as the offered price. Sellers and lenders prefer offers with fewer contingencies.
- Earnest Money - Sellers may be hesitant to accept your offer with a low deposit. A buyer that has little to lose can easily pursue another property and "walk away". 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 allowing 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 better terms and conditions may have a better chance at being approved by the lender. The lender will give the homeowner 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 have no set formula for determining the value of the property other than to substantiate values through due diligence. 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 market conditions 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 Pelham NH short sales, foreclosures and MLS listings currently on the market. Please call us at 800-856-2479.