Let me know if you need any help.
You can also buy a short sale at one of our auctions at http://www.experthomeauction.com. We do an auction search with our title company to identify the above problems even before we offer the home to weed out the most serious problems. Then when you are participating you get all the disclosures about the home in our bidder's package prior to bidding and winning. So you know before you take the time to make your offer. In addition you get a free and clear title at the end of the process just like any conventional sale. Good luck!
Short sales are a misnomer. They should be called "long" sales or "uncertain" sales instead (they are called "short" because the lender ends up short of money). Each situation is different, and the success of a short sale depends on a number of factors:
1. Whether the owners have 1 or 2 mortgages with the same or different lenders;
2. Who is managing those loans for the owners of the note - some loan managers are very efficient, others - well...
3. How eager and motivated are the sellers to provide (and continuously update) requested documentation to the lender in a timely fashion (many owners get frustrated after the 3rd or 4th request).
4. How experienced are the listing agent, the selling(buyer's) agent and the loan manager negotiator.
5. How close the BPO (Broker Price Opinion, a mini-appraisal the lender orders to gauge market price for the property) is to the offer. If the lender nets a high percentage of their debt, they will likely approve the short sale. Otherwise they may reject it or counteroffer and take the property to foreclosure.
6. Also, you need a bit of good luck!!
I hope this helps!
Keller Williams Realty
Charleston-Mt. Pleasant, SC
Now, should you buy a particular home that's a short sale is an entirely different question altogether. There are a few questions that you need answered to know if the sale can ever occur?
1. How many liens are on the home that will need to be satisfied? The more not the merrier but if there's a plan to handle a 1st mortgage, 2nd mortgage, back taxes, and unpaid HOA, all hope isn't lost...but it doesn't look good.
2. Has the seller or agent ordered a title search prior to listing the home? A title search will reveal most of the other encumbrances on the property. Back personal income taxes, back property tax, past due HOA, judgments, bankruptcies, and even unpaid child support can prevent the short sale from closing.
3. Does the agent have the short sale package in hand? This could cause delays if the seller has not even gathered the information needed to submit a short sale package
4. Is the seller currently engaged in a loan modification? Often times, banks will only pursue one at a time: short sale or loan mod. If they are engaged in a loan mod, you need to know they have formerly requested to cease the loan mod.
5. Has the seller contacted the lender? Often times, lenders will pre-approve a short sale if the seller reaches out to the lender and requests an FHA short sale (if they have an fha loan currently) or HAFA short sale.
6. Who set the price in the MLS? The price can be a wild guess, approval price of a former offer, or a lenders directive of what to price the property at.
7. Where is the seller and when last contacted? If the buyer skipped town and isn't responding to the agent, good luck getting them to sign your contract.
8. When will the seller sign your contract? If the listing agent is sending your unsigned offer to the bank, anyone can come along at any time and make a better offer and purchase the house ahead of you. Short sales where the seller doesn't sign: RUN.
9. When is the foreclosure date?
As far as short sales being a "good deal", they can be HOWEVER keep in mind that a short sale allows a seller upside down on their mortgage to sell their home for market value. Unlike a bank-owned property, the lender actually tries to consider the market value of the property and as such, tries to get as much as possible for the home. Also, some lenders rely on unskilled agents or computer programs to set value which can result in price that is out of this world. Be prepared for that.
Finally, the seller stopped making basic repairs and maintaining their home long before they stopped making their mortgage payments. These homes are sold as-is so a good home inspection is essential and can be great ammo to help negotiate a lower price with the lender.
Best of luck!
It can be a great deal just make sure you hire an agent who really understands the short sale process. The more you know about the home and the situation before you write an offer the better. A good short sale buyer agent will know the right questions to ask.
In the first week of escrow, you'll be paying for an appraisal and home inspection out-of-pocket. This goes for every property when you get a loan. This could be in the ballpark of $600 to $1000, depending on the property, appraiser, etc.
When you have the inspection, the seller will rarely pay anything because they've proved they have a financial hardship, and the lender has probably already budgeted for repairs, so anything over the budget amount will be expected to come from the buyer.
The seller can file bankruptcy while you're in escrow, after you've shelled out your appraisal and inspection money, and the sale is over. Same for a loan modification. The seller is usually not in a good place financially, so they're not thinking of you, and these are not things you can control.
Sellers have been known to sell the cabinets and fixtures after their buyer has done their final walkthrough, and if you can't find them, what's your recourse? They've already proven that they have a financial hardship, so suing may result in more money paid out.
This is not the norm, but it can happen. If you do submit offers on short sales, it's better to know what can happen up front. Keep looking while your offers are in, just in case none pan out, and never get emotionally involved!
Let me know if I can help you in any way!
Joan Wilson (Realtor, SRES, Ecobroker, Certified REO, HAFA, and Short Sale Specialist)
Prudential California Realty
Direct Phone: 760-757-3468
800-975-7481 x 111
License # 01341483
Find Your Dream Home:
Buying a short sale can be fine, if you have time, patience and a tolerance for uncertainty. In the best case, you are able to find a nice house make a clean offer, wait 90-120 days, get an approval from the lender and get a good rate for your mortgage.
In the worst case, you find what looks like a nice house, make a good offer, wait 120-190 days or more, get your offer turned down or countered by the bank, find out through inspection that there are major issues with the house and have interest rates climb so high you may not be able to afford what the bank counters at. Your agent or the listing agent may not know enough about short sales to properly advise you, or the sellers and lots can go wrong.
I don't tell you the bad to scare you off, but to prepare you realistically for what may happen.
Learn all you can about the pros and cons of short sales if you decide to pursue one, they can be a good deal if all goes well, but you may find a great house without having to go through all the trouble. If you do decide to take a shot, make certain your agent has recent experience representing buyers of short sales. Best of luck.
Not all short sales are the same. Some are good buying opportunities and some will never get approved. You have to take them case by case and work with an experienced agent who can help you navigate the process. One thing you should be prepared for is a longer wait than a standard or REO sale.
good luck buying a home.
Short sales are great opportunities. You are buying a home that has loans against it that are greater than the purchase price. The existing lender(s) release all of their claims against the property so there are no future problems for you. You also will get title insurance that insures you against claims form the previous lenders.
Depending on the lender, the short sale process may take several months so you do have to be patient and willing to hang in there until the process is completed.
I have represented many buyers who have purchased short sales and foreclosures. There may, in some instances, be past HOA dues for condos that the buyer may have to pay. The lender doesn't want to pay those fees and the seller usually doesn't have enough money to keep current with the dues.
All in all short sales represent a great opportunity. If you have any questions please feel free to call me and discuss any concerns that you may have.
Broker of The San Diego Property Shop
Short sales can be a great opportunity as long as your agent is very familiar with the short sale process.
There are many pitfalls you should be aware of before comiting to one.
If you need someone to help you through it I'd be happy to help.
Daniel Di Matteo
Century 21 Award