Short Sales In Los Angeles, CAÂ - The short sale process
I've been exploring the LA Short Sale process. By now you know what a short sale is, what might qualify as a short sale hardship, and what goes into a short sale package.Â Now you are ready to list your house
This information is pertinant to both short sale seller and buyers interested in an LA short sale.Â Both parties need to know what is involved in making an offer that will be acceptible to the bank and what the short sale process entails.Â
The seller has already completed the short sale package and their agent has can now show it as an active listin on the MLS and multile websites concerned with real estate such as Realtor.com, Trulia and Zillow. There are many more sites that list real estate for sale and if the listing agent does their job correctly, the new listing will be syndicated to many of them.
The listing will indicate that the property in question is a Los AngelesÂ short sale. This will alert buyers to the fact that the sale may take several months to close and that some items which are customarily paid for by the seller in a "normal" transaction may become the responsibility of the buyer. (This holds true for bank -owned/ REO properties as well but that is for another post!) Â
The first thing to remember about a short sale is that the seller still owns the property, NOT the bank.Â The seller has a mortgage or multiple mortgages on the property and will need the approval of the lender(s) before a short sale can be consumated but the seller is still the person to whom the offer is being presented. The seller may accept any offer, but there must be 3rd-party approval from the lender before the sale can close. In most cases, the property is being sold in as-is condition. The lender will absorb the seller's closing costs but may not be inclined to pay for termite, government required retrofit or any repairs. Â
Any short saleÂ buyer will want to have a strong, clean offer that will be acceptible to the lender.Â Many times a seller is willing to accept an offer that is much lower than what the bank is willing to accept.Â It's best for the buyer to consult with his agent and look at recent comparable sales.Â Forget anything you heard about banks being willing to accept pennies on the dollar to "get rid of"Â properties.Â A Los Angeles short sale will generally not sell for much less than 70% of what is owed by the seller, depending on condition and how it compares to recent sold properties. Using this information, a strong short sale offer can be prepared that has a good chance of being accepted by the lender
The offer should be prepared by your Realtor on a California Association of Realtor residential purchase offer form which will include a short sale addendum.Â The short sale addendum can serve to protect the time frams of your contingencies but not allowing the clock to start until written acceptance from the lender has been received.
If you are obtaining financing and not paying all cash for the purchase, you will need a preapproval letter from your loan officer. This will require that you have submitted all of the necessary documentation to procure a loan and that a bank has approved you for the purchase price you are offering. Documentation normally includes W-2's, bank statements and tax returns. You may also need recent paystubs.
Normally, a 3% earnest money deposit is required. Make sure that your funds are available to be placed into escrow within 3 days of written acceptance by the bank of your short sale offer. Normally this may be paid to escrow with a personal check but it is not unusual for a bank to request funds in the form of a cashier's check or wire transfer.
Along with your offer and loan approval, your real estate agent will need a copy of your bank statements showing that you have the funds require for down payment and closing costs.Â Your agent will provide your offer and backÂ up documentationÂ to the listing agent who will in turn present it to the seller.Â If it is acceptable, the seller will sign as accepted. If not, there may be counter offers back and forth until the buyer and seller have agreed on price and all terms.Â At that point, the listing agent will send the lender the short sale packageÂ and offer and the waiting begins.
The next steps are between the listing agent and the lender(s).Â
Normally the firstÂ thing is for the bank to assign a negotiator to the property.Â The negotiator will hire an independent agent to prepare a BPO (broker price opinion) on which the bank will base the reasonableness of offers received.Â This can be a problem if the BPO agent is not fairly familiar with the neigbhorhood and comparable properties and does not turn in an accurate value range for the property.
The lender may hire an appraiser to determine fair market value of the short saleÂ property as well.Â From here there are negotiations between the listing agent and the lender's negotiator.Â The bank may accept or reject the offer but what normally happens is they will provide the listing agent with a list of what they will pay for and what the final payoff to the bank must be if the short sale is to be approved. Many times the buyer will be asked to assume additional costs and/or raise their offer price.Â Negotations continue with the buyer and the bank (via the listing agent) until, hopefully,an agreement is reach and the house can be sold as a short sale. This allows the seller to walk away without a foreclosure on his credit record and a patient buyer a good deal on the house of his choice. It's a win-win situation for everyone!
If you are in a tight position and are not sure if you qualify for a short sale in Silver Lake or surrounding areas , please contact me directly at 213-215-4758 and I will go over the specifics of your situation with you and make recommendations on your best course of action.
For more information on shorts sales in Los Angeles County and buying or selling property inÂ Los Feliz,Â Silver Lake, Echo Park,Â and surrounding areas, contact me directly at 213-215-4758 or check out LApropertySolutions.com
Copyright Â© 2010 By Jenny Durling *All Rights ReservedÂ *Â Short Sales In Los Angeles, CA - The short sale process