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Geoff Ommen's Blog

By Geoff Ommen | Broker in Barrington, IL

Northwest Suburb Short Sales - Part 3


Geoff, I want to buy a short sale.  How long will it take?  I cringe, but the correct answer until you know the details is “a minimum of 3-4 months”.  Every once an a while someone’s cousin buys a short sale in 3 weeks.  That is an exception and totally not the rule.

Once a buyer has agreed to a price with the short seller, the real work begins.  In theory the seller can agree to sell their house for $1.  Now it is time for the actual negotiation to begin between the seller and the bank.

You see, in most cases the bank has not agreed to the write off involved in the short sale.  They may or may not even be aware the short sale is happening.  Once an offer is accepted by the seller, the person in charge of the negotiation will present it to the bank.  This is where the time can drag on and deals fall apart.

Buyers and sellers sign what is known as a short sale addendum.  In this document, it states some of the basic rules of the short sale transaction.  The important parts of this document are the length of time the contract is good for and the as is condition of the home.  Generally speaking the buyers and sellers initially agree to a 90 day period that the offer is valid for.

What can happen in the 90 days to derail the process?  Seller can be slow to present proper paperwork.  Paperwork can get jammed up in the banks.  An issue arises with the buyer’s loan due to a change in circumstance.  Sellers hardship situation could change or worsen.  There are plenty of events that can either extend this process or cause a negative outcome to the transaction.

Extended transactions can come into play if there are multiple lienholders or if the sellers are going through some other legal issues (divorce, bankruptcy, etc).  The best thing you can do as a buyer in a short sale is understand that there are no guarantees.  The fact that you are getting a home below market value is what makes up for this pain.

For the final installment of short sales, I will highlight some basic agent errors.

Comments

By Yeprem P. Davoodian, M.A.,  Sun Apr 7 2013, 00:07
thanks

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