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Renee Porsia's Blog

Philadelphia's Real Estate Blog

By Renee Porsia | Broker in Philadelphia, PA
  • Short Sale Really A Long Sale

    Posted Under: Foreclosure in Philadelphia  |  February 4, 2009 4:29 AM  |  645 views  |  No comments

    For buyers, purchasing a home that is involved with a short sale can be a really great opportunity however be prepared to wait and wait and wait and oh, wait some more.

    For those home owners who simply can't afford their monthly mortgage payments anymore and are facing foreclosure, are now turning to their banks and asking if their home can be approved for a short sale.  In case you are not aware of what a short sale is, a short sale takes place when a home owner owes more on their home than what the home will eventually sell for and will not have enough to pay off their current mortgage. The bank can approve the sale of the home and essentially forgive any remaining monies due on the mortgage or in many instances mortgages therefore avoiding foreclosure.

    But, what's with the name "short sale?" It's been my experience that a short sale isn't short at all, in fact, it's a very long, drawn out tedious process that can take months to close leaving many impatient buyers wondering if they will ever take possession of their new home.

    So, why does it take so long? Well for one reason, many Realtors simply do not know what they are doing. Many Realtors think that once they send the offer over to the bank, that's the end of their responsibility and all that is left to do is wait for an answer. An answer that probably will never come. Once the offer is sent to what is called the loss mitigation department, it has to go through various departments for approvals. The bank needs to have an their own appraisal performed, they need to review all of the paperwork they requested from the buyer which includes what is called a hardship letter that explains why it is the home owner couldn't afford to pay their mortgage anymore as well as bank statements, comps, photos, tax returns and anything else they can think to ask for. They also need to see an estimated closing cost sheet which details just how much money the bank will be getting from the sale of the home. Each process can take weeks. The truth is that lenders usually just drag their heels in getting an answer back to the Realtor.

    I think the name "short sale" confuses many buyers. Seriously. I've told many buyers exactly what the process involves and yet the buyer will still call every week to see if their offer was accepted.  It's not just buyers it's Realtors to. I've had buyer agents call me every day to ask what is going on with their client's offer.

    What I can say about a short sale is that yes, it can be a great opportunity for a buyer to get a very nice home for a great price but if you need to be in your new home quickly, a short sale is not for you. If you do not have patients, a short sale is definitely not for you. If you have a home to sell and do not have a place to stay if your home sells while you wait for an answer from the bank, a short sale is not for you.

    There is nothing short about a short sale. The name is a bit deceiving though I am sure the name has absolutely nothing to do with how long the process actually takes, it still doesn't make explaining it any easier.

    If you are a buyer who is involved with a short sale, be patient , make sure your Realtor is experienced with short sales before you ever view the property and understand that the seller has no say over what your offer is anymore. It's all in the bank's hands.

    And that's the long and not so short of it.

  • What You Should Know About Foreclosures Before You Buy

    Posted Under: Foreclosure in Philadelphia  |  January 27, 2009 11:51 AM  |  1,676 views  |  10 comments

       
    I get a lot of calls every day from buyers who want to purchase foreclosed homes. After speaking with them for a few minutes, I realize that they really have no clue about what is really involved in purchasing a foreclosure.

     With so many foreclosed homes on the market today its no wonder that so many buyers are thinking about purchasing one.

    Buyers think that because the home was foreclosed on, that it just has to be a great buy. Not always the case.

    I have been working with bank properties for all of my career and I can tell you lots of stories about foreclosed homes but I digress. I want to concentrate on what you should know before you venture out there.

    Foreclosed homes are not always in great shape in fact, expect that the home will need repair, sometimes a lot of repair. When people are losing their homes, they tend to do lots of damage to the home.  It's just the way that it is. Expect that the utilities will not be working. Banks do not like to put utilities in their name. Sometimes they have the Realtor put them into their name but I never liked to do that so I am certain many other Realtors feel the same.

    Do realize that you will be buying the home in "as is" condition. Now, do not get confused, though you are buying a home in "as is" condition, that does not mean that you can not negotiate with the bank. I do it all of the time. Generally, these homes have been sitting vacant for a long time and nobody has kept up with maintaining the home so the home could have termites, mold, leaks, a bad roof, broken windows etc. Understand that banks do not want to negotiate or issue credits to you and that is why you need an aggressive, experienced Realtor who knows how to work with banks.

    You can have a have a home inspection but keep in mind that you will be responsible for paying the inspector and any repairs that are needed. If you need to purchase as an FHA buyer, you will be responsible to make all repairs prior to settlement and that could wind up costing you a lot of money even before you take possession. Generally, if you need to purchase as an FHA buyer, I always advise my clients NOT to purchase a foreclosure.

    If you do not have money for a down payment and closing costs, buying a foreclosed home is not for you. The bank will want to see how much money you have. If you are needing to scrape together enough money just to get to the table, you will be getting in way over your head. Remember, you are buying someones home who got in way over their head. You certainly do not want to end up the same way.  There will probably be other offers and the bank will be looking for the strongest.

    You will have no history of the home. If an investor purchased the home for a low price and used cheap materials and then was forclosed on which does happen, you may have future issues down the road. You get no disclosures with a forclosed home as you would from a home owner who is selling their home.

    The bank will operate on their own schedule and not yours. In a traditional sale that involves a seller, there is usually a respond by date to allow for the seller to review your offer and make a decision. Banks DO NOT operate in the same way. They could get back to you in a day, a week or even a month which I have seen them do. If you are looking to be in a home by a certain date, buying a foreclosure could change your plans.

    Make sure to have some place to stay because you may not be able to move in until after you have made the necessary repairs.

    Foreclosed homes can be a way to get into a home at a reasonable price but you do need to do your homework and have the money and time to put into it. You should find yourself a buyer agent who is experienced in dealing with bank properties and not a Realtor who is a wallflower.  You need an aggressive Realtor who will fight for you.  You are buying someone else's problem. Someone who could not afford to pay their mortgage or make the necessary repairs to the home. As long as you realize that going in, you will be ahead of the game.

    With home prices being so incredible right now, you may just be better off buying a home from a traditional seller and knowing exactly what you are buying and not having to worry about making all of the repairs, putting out extra money and you may even get a better deal without all of the stress.

    I hope I have given you some things to think about prior to starting your home search. It's better to be safe than sorry rather than kicking yourself or blaming everyone else after you've purchased your home. 

 
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