How to purchase a Short Sale Home

You maybe asking what is a short sale home? You are also probably asking what should I know about how to purchase a short sale home. Well a short sale home is a home that the seller is having to sell because of a looming foreclosure. They have a higher loan on the home than it is worth, so they are what is called upside down in their loan. The sellers can negotiate with their banks and lenders to allow them to sell the house for what it is worth rather than what they owe on the home. The deal is called a short sale because the seller is selling the house for less than he owes. The owner may be liable for the difference or the bank may absorb the difference in hopes of preventing the home from going to foreclosure.

In the buyers market that we are in right now a short sale home can be a great purchase for a potential home owner or even an investor. You may be wondering how to purchase a short sale home? Well you will have to be a savvy consumer and do a little home work. To answer the question of how to purchase a short sale home you will first have to find one. This is not allows stated on the sales flier at least not in plain terms. If a home is listed and the listing says offers must meet approval of the owner's bank you can pretty much bet this is a short sale home. Another indicator of a short sale home is a home that has been on the market for a long time and the price has steadily come down from the original asking price. This one can be tricky though. The market value of homes have been falling so a home that is fairly new and the price is falling on it may be a good indicator of a short sale home, but an older home that the price is falling on may not necessarily be a short sale but rather the owners already own or owe little on the home and are able to sell for less themselves.

Once you have found a short sale home it is time to do your home work. You will want to have a good idea of the fair market value of the home. This should be around the acceptable price the bank is willing to take as an offer. You will not want to under bid the home by more than $20,000 or so. That type of bid is more likely to be rejected. It is the banks responsibility to get a fair market value for the home or they will be responsible solely for the amount the home was undersold for. When looking at how to purchase a short sale home do not expect to pay $150,000 for a home that is worth $300,000 in fair market value, your offer will mostly like just be ignored.

You will want to return with a counter offer if your first offer is rejected, but increase the amount by more than just a few pennies. If you came close the first time the bank most likely would have accepted your offer. Purchasing a short sale home can be a wise investment or a really good way to get a great house at a great price. You will be finding a lot of homes making short sales to avoid foreclosure in this falling economy. If you are one of the special few buying homes then consider a short sale home to sweeten your investments.