40 Questions You Need to Ask When Considering a Short Sale

You’ve found a home worth purchasing and its a short sale. Now its time to ask a few questions, but not just about the home. You’ll need to ask questions about everyone involved in the transaction including yourself to make sure moving forward is the right move. This will be a multi-part post starting with the questions you need to ask the person in the mirror.

You’ll want to ask questions to (or about) the following:

  • You (yes you)
  • Your agent
  • Listing agent
  • Home owner
  • Banks involved

Questions for You: The Self Analysis

For the most part every home buyer has a preferred buying preference in today’s market. There are three main categories of buying preferences; bank owned, traditional and short sale.

Bank Owned: You want the smoking deal and you’re willing to do some repairs and deal with some paperwork nonsense from the bank.

Traditional: You think the headache involved with fixing a bank owned home and messing around with a short sale is for the birds and you’re happy paying a premium to skip to the front of the line.

Short Sales: You don’t have enough stress in your life and you’re wondering what it would be like to turn into a basket case for 3 months while you wait for a response from the banks. But you’ll get a great deal.

5 Questions to Ask Yourself

  1. Am I willing to sit for 3 months and wait for a response from the banks?
  2. Will I be alright if the banks reject my offer and want me to pay more money?
  3. What will I do if the deal falls apart in three months and I have to start looking all over again?
  4. Will I feel comfortable not looking for more homes and not putting in more offers while I wait?
  5. How much am I truly willing to pay for this home?

Reality Check Points

  • The home will most likely be approved in 90 days and you won’t have to start over
  • If you offer far below market value for the home, the banks will want you to pay more for the home, submit a realistic offer
  • 95% of the time the bank’s approved price is a very good price
  • Writing offers on subsequent homes is a material fact to all your offers and needs to be disclosed to the Seller, who will cancel the contract

Buying a short sale can be a tough process, emotionally draining, frustrating and just not worth the hassle. Or with the right frame of mind it can be a simple transaction that just takes longer and will involve a few changes before everything is approved. Short Sales aren’t for everyone, they may be a great deal, but it might not be in your DNA to deal with the entire process.

This is part 1 in the series: 40 Questions You Need to Ask When Considering a Short Sale

If you’re looking for the list of questions we use to start qualifying a short sale, I’ve included it here:

- Redfin – Questions for Short Sale Listing Agent

Upcoming Posts

  • Questions for Your Agent: Veteran or Newbie?
  • Question for the Listing Agent: Pro or No?
  • Questions for the Home Owner: Is a Short Sale Realistic?
  • Questions for the Banks: Will You Play Nice?

Author of this Post

If you have questions or comments just leave them below or get in touch.

Marcus Fleming

marcus.fleming@redfin.com
Serving East Valley, Cave Creek and Scottsdale
Homes Closed: 60+
  • http://www.sonoranfineproperties.com Candicehudson

    In the past I was reluctant to show short sales and get my clients excited about a 6 month wait. Now I am showing them and gettng them approved as well as closing them. Definitely well prepared for road blocks and surprises along the way. Also don't be surprised when you find out a short sale is overpriced!

  • RJ

    Marcus and Candice,

    “You don’t have enough stress in your life”, “turn into a basket case for 3 months” :) I really like the analogy. However as mentioned earlier posts, with a significant amount of the total sales in the bigger markets becoming short sales, buyers are tempted to take a serious look at them.

    And you're correct Candice, I've seen a couple of short sales that are definitely overpriced. My thoughts are, why should I as a new buyer overpay for a home to bail someone else out of debt. Debt, from expenses that I never enjoyed. Regardless of what the bankers and BPO say.

    Great post! Thanks!

    • http://www.sonoranfineproperties.com Candicehudson

      RJ,

      You should NEVER overpay for a home unless it is the only home you actually think you would enjoy living in and you can afford it and you are never going to move and you never call the agent who sold it to you when you want to list it for sale! :) Problem is, in this market, which is totally crazy and unpredictable even for us PROS is that none of us really have any idea of what is overpaying. Just when you think you have a great deal, a nicer one comes on the market for less. Or you go to look at comparables for an offer you are writing and it is way below the other sales! Then you start wondering if the subdivision is Questa Verde (Poltergeist). Remember, most of the BPOs are being done by Realtors who need the few bucks they give you to do them. When you look at some of the pricing, you really have to wonder!

  • RJ

    Hi again Candice,

    You're funny! I agree with you, but this is the reason why we periodic buyers have the pros like you guys to rely on. Yeah, often times when I try and make sense of some specifics in the industry, it feels like a bad dream. The bottom line, even with all the advice and market indicators, when it comes to dealing in this industry and with some of the lenders I feel like I have to wear some garlic around my neck and keep the wooden stake/silver bullet nearby! :)

  • Rocz609

    I'd like to make a $100,000 cash offer on a condo that is short sale listed at $149,000.  Don't have any more money than that.  Is this a feasible idea, or will i anger the seller?