I'm a first time home buyer, and I've been looking at properties listed as short-sales. I know that the process can take up to four months, so my question is how I should work the pre-approval process? I have a few potential real-estate agents, but they are all pressuring me to see how much I can get pre-approved for. My question is whether I should go ahead an get approved now or wait until the bank has approved the short-sale? I don't want to have to get re-approved a few months down the line if the sale doesn't go through or if I find another place. Any help is appreciated. Thanks as always.
You can get pre-qualified instead of pre-approved. You give them all of you info but they will not go as far as pulling your credit. They sort just look at your income and debt. Just remember things could change from the pre-qualification to the pre-approval if there are questionable things on your credit (collection, lates, etc.).
By the way, short sales can take quite a long time. I signed a contract for a short sale almost four months ago. I just heard back from the bank last week. I countered their offer so there is not telling when I will hear back again. This is all before I have even started the things I need to do once we have an agreed upon contract. I have had to learn patience over the last few months. If you are looking for a quick sale this is not the way to go. If you have time and you think the house is worth it then it is a great way to save get a good deal on a house.
I would only rely on the pre-qualification if you without a doubt would know for sure your situation would qualify, and the paperwork would be more or less just a formality. Otherwise a pre-approval can uncover issues that may have been preventable if those steps would have been taken in the first place, like when the short sale offer is made, rather than 3-4 months later, when it finally may be accepted. Further, not all short sales take forever, if there has already been an offer made and the bank has already done some research on the property it may only take a few weeks or a month or two to hear back on your offer.
Also I read yesterday that B of A short sales require the buyer to have a preapproval letter and a copy of the earnest money check. That could be wrong, but I know we did that and are waiting for our results.