Buyers are always looking to get a good deal for a house. In today’s market, when you see a price listed for a house that looks right, 9 times out of 10, the house is going to be sold as a short sale. I will always call the listing agent to find out if the home is a short sale. The term “Short Sale“ is very misleading and is anything but a “Short” process because the sale of the home is ultimately up to the lender and not the seller. Be prepared, when making an offer on a house that falls into this category, it can be longer than the customary “ 30 day close “. It can be a very complicated process. Many homes buyers have waited 4 to 6 months to close on a short sale, sometimes longer. What is a Short Sale? A short sale means the seller's lender will need to accept a discounted payoff to release an existing mortgage. Just because a house is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it. It is ultimately up to the lender. Be aware that the seller does not need to be in default – pre-foreclosure - before a lender will consider a short sale. A lender may consider a short sale if the seller is current but the value of the house has fallen. There are many reasons why the value of a house may have fallen lower than what is owed, so a discounted price might bring the price in line with market value, not below it. Check the Public Records Do your research before making an offer. I will find out who is on title, whether a foreclosure notice has been filed and how much is owed to the lender(s). This is important because it will help determine the complexity of the negotiating process. If there are two different lenders, you could be in for a long haul. The tricky part in this situation is to have both lenders agree to terms at the same time, in unison. If this doesn’t happen, one lenders offer will expire before the other has agreed to terms and the negotiating process starts again! Hire an Agent with Short Sale Experience It's one strike against you if the listing agent has never handled a short sale, but it's even worse if your own agent has no experience in that arena. You need an experienced short sale agent. I will help to expedite your transaction and protect your interests. You don't want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner. Submit Documentation & Purchase Offer to Lender When your ready to submit an offer, these documents must also be submitted with the offer. A copy of your earnest money deposit, a preapproval letter from your lender or loan broker and a list of comparable sales that support the price you are offering to pay for the house. By sending these additional documents, it will not only show you are serious and ready to purchase the house, but that you will provide a seamless, smooth transaction Give the Lender a Deadline Your offer should be contingent upon the lender's acceptance. Give the lender a reasonable time to respond documented on an addendum as part of your offer. If they do not respond by then you will be free to cancel. If the lender is not under any “pressure” to make a decision, the paperwork will most likely be given less priority than others. Reserve the Right to Conduct Inspections Generally, the lender will not be willing to pay for customary items that a seller would pay. These include home protection plans for the buyer, buyer credits and pest / termite inspections. A buyer will be asked to purchase the property "as is," which means no repairs. It is extremely important that a buyer obtain a home inspection and pay for other types of inspections such as pest, roof, sewers, septic tanks, chimney or fireplace inspections. Do not waive your right to obtain these inspections. Lender Demands Lenders will not agree to a short sale unless there is no equity in the house and if the homeowner is unable to repay the difference between the sales price and the existing loan(s). The homeowner needs to have a legitimate hardship and describe that hardship to the lender in a letter. There is a chance the homeowner may also owe taxes on the amount of debt that is forgiven. You will need to consult a tax attorney for your specific situation. A homeowner receives no compensation if their home is sold on short sale terms because the lender is losing money. IF YOU ARE THINKING OF BUYING A SHORT SALE OR NEED TO SELL YOUR HOME ON SHORT SALE TERMS - CALL ME FIRST. THERE IS SO MUCH YOU'LL NEED TO KNOW BEFORE YOU MAKE YOUR FIRST STEP. I CAN HELP. |