When buying a shortsale the process involves the following elements:
1. You must have a pre-approval/pre-qualification letter
2. You need to know how many loans are in default or coming in "short" from the sellers side
3. You need to know if the listing agent has experience with submitting and closing shortsales
4. Understand that shortsale lenders generally refuse to pay for HOA transfer fees, HOA document fees, and repair requests.
The buyer submits their offer to the seller. The seller selects the one (1) offer that is the best in their eyes and it is sent to theiir lender(s).
Then their lender(s) decides if they will lose more money accepting it as a shortsale or refusing the shortsale and eventually declaring foreclosure on the property should the seller stop making their payments.
Let's say the lender(s) decides to allow the property to be sold as a shortsale. Then the lender(s) decide the amount they need to make, called "Net".
The lender(s) will then either submit back an acceptance of the purchase agreement, counter the purchase agreement with their own terms or demands, or refuse the purchase agreement. This can take anywhere from 20-90 or more days. Typically we see the response come back around 45 days from the lender(s).
At this point the buyer has the opportunity to move forward with the acceptance and start their inspections, etc. Decide if they will accept the counter offer as-is or re-counter themselves. Or walk away once receiving the refusal notice.
Once you are in contract, everything is pretty much similar to a standard purchase, except longer. Response time from the lender(s) throughout the process can be 3 business days to weeks. Each and every time you need to communicate.
Shortsale closing timeframe can range from a miracle of 30 days to more than a year. It all depends on how many loans, is the listing agent submitting information correctly throughout the process, do the lender(s) want to shortsale the property, and you the buyer doesn't walk away frustrated before the deal is done.
Please understand that this is just a very brief description of the shortsale process, there are many different scenarios and factors that could cause each shortsale transaction to be completely different.
The agent who represents you in a short sale is extremely important; arguably the most important element of a successful, profitable transaction. An agents knowledge of the short sale process is key. It is your agent who will advise you if there is a viable short sale, how many lenders are involved and vet the sellers agent to find out the probability of the sale being approved by the bank. Your agent will advise you how to present your best offer, (the price and terms will be very important) as well as how to handle the inspections since short sales are sold "As Is". The sellers will not be making repairs and either will a lender. There is a process a short sale goes through; a timeline of sorts, and certain thresholds must be met at each step of the approval process. It is by no means a certain process. Because of the variables of a short sale, the single most important step in purchasing a short sale home is the agent you choose to work with. Knowledge, integrity and short sale experience is necessary. Perhaps the most important character to seek in an agent is expert negotiation skills and willingness to solve problems as they pop up. Your agent can mean the difference between getting your offer accepted or not, and what kind of "deal" you negotiate. Remember, the purchase price is often the determining factor in how profitable your home purchase will be. Choose your agent wisely. Everything else is a step by step process which seems to change every few months.
Don't back away from a short sale- buying the right one can get you a dream house not ordinarily possible. There is a lot of opportunity in short sales. You just need a pro to guide you through the process. Research is your best bet.
Tracy Parker 925-389-0645
Prudential California Realty