Due to certain factors it can be hard for buyers to indentify and find short sale properties; however, there are several simple ways to help those who want to pursue such a real estate option can use to determine a property has a short sale alternative. These include carefully reading the listing descriptions. Within these descriptions may be certain keywords that can clue a buyer into the fact that the property is a short sale. However, this can be time consuming, mind numbing, and there is no guarantee that just because a description contains one or more these keywords that it is, in fact, what you are looking for. The best method to identifying these particular properties is to approach a loan officer at your local bank. They should be able to classify a particular property based on their financial records.
Before we can begin to understand why these types of opportunities are hard to identify, we must understand how these types of sales affect real estate agents. A short sale is an option presented by the property owner, subject to approval of the loan holder, which allows a property to be sold for less than the mortgage owed on it. A bank approves such sales because it is confident that the property will not be sold otherwise and they will lose the entirety of the loan as opposed to only a partial loss. Most real estate agents dislike short sale properties because buyers offer lower prices for these types of real estate.
Therefore, when an agent lists a property in the MLS (Multiple Listing Service) Database, they purposely try to camouflage any sale of this type. However, they cannot, by law, hide this fact from potential buyers. Therefore, they attempt to use other words or phrases, instead of directly identifying the property as a short sale. Look for the words: auction, notice of default, pre-foreclosure, bank approval required for sale, or preapproved by lending institution. All of these phrases denote a real estate property that has devolved to the ownership of the bank and can therefore be used to find short sale opportunities.
If reading through hundreds of carefully and deceptively worded listings is too time consuming, then you can visit your local bank. Loan officers deal directly with defaulted loans, foreclosed properties, and other banking assets. It is their job to issue sound loans and to ultimately recover collateral and limit losses through the default of bad or risky loans and mortgages. They should therefore, be able to provide a buyer with a list of real estate in the area that is in pre-foreclosure. This means that the bank may be willing to approve these properties to be sold for less than what is owed on them in order to recoup some financial loss. If they are unable to provide a list, then they can surely help a buyer determine if a particular property is in pre-foreclosure.
Because real estate agents feel that they will earn less of a commission on real estate advertized as a short sale opportunity, they actively try to hide this fact from buyers. However, by reading the listing carefully and identifying certain keywords, or by questioning a loan officer, a buyer can easily identify such properties.