The first thing I advise a client to do is to look at your time frame and be really honest with yourself. Ask yourself the following questions:
Do I have the patience to allow this sale to work through the system, knowing that it may take months?
Do I have an alternative place to live if it takes longer than 90 days?
Will I be able to accept a house in "as is" condition?
After you have answered yes to these questions, then you need to talk with an agent who is experienced in short sale transactions. They understand the time frames involved, they know the right questions to ask the listing agent, and they are aware of the pitfalls so that they can guide you through the process to avoid them.
Because short sales can be tricky, I would advise selecting an agent who has successfully closed at least a few short sale deals. There are also classes agents can take to educate them on the short sale process. So first ask yourself the above questions ( be brutally hones with yourself ), and then ask your agent; â€œWhen was your last sold short sale?â€ Have you taken classes on Short Sales? Are they on any team or in any group that focuses on Short Sales?
Additionally, it's wise to select a settlement company that also has short sale experience. If your agent has completed more than one short sale, they probably have a relationship with an attorney who knows the system. I know, I have a close relationship with my closing title company. This is important because they have to prepare the HUD before the bank will accept the offer. I will be happy to give you recommendations for a closing company should you need one.
John Womeldorf/ Realtor
Liz Moore and Associates
If you are a first time homebuyer, I suggest you stay away from short sales, especially when there are so many other opportunities available, such as a bank owned (the proeprties already foreclosed upon), HUD's, or a VA owned properties. These types of properties can offer you the same savings in a purchase, yet have a more "guaranteed" closing date. With short sales, you're at the mercy of the bank, and I've seen banks take up to 6 months just to say "NO" to your offer. Last year, most of my buyers purchased either a bank owned home or a VA owned property, and still purchased the property for $30,000 to $80,000 under tax assessed value! The closing dates are firm, and the savings are great.
I also have to disagree with Jamie's reply stating "...banks would much rather negotiate a short sale than a foreclosure..." because in my experience, this couldn't be further from the truth. Yes, sometimes a bank will sell short, but the situation has to be just right. But here's just two of many reasons why most of the time, a bank would rather foreclose over selling short: (a) selling "short" can cause more damage to a bankâ€™s portfolio over a foreclosure; (b) why would a bank take a $100,000 loss when they can foreclose on the property, re-list, sell for a profit, and more importantly, keep their investors happy.
Thereâ€™s honestly way too many variables to state in this posting regarding the pros and cons of a short sale, but please feel free to call me and I'll be happy to discuss short sales and other housing opportunities available to you - no cost or obligation.
Frank Biganski, Realtor
Reliance Realty at Port Warwick
240 Nat Turner Blvd., Newport News, VA 23602
All good advice, but having just attended a seminar on the subject, thought I'd add more to the "mix". First and foremost, definitely work with an agent and company you trust, regardless of # of short sales, etc., 'cause just as every sale is different and complex, so too with short sales, but tenfold!
Long & Foster has a wonderful new program available to it's agents and clients, through "The Platinum Group" http://(www.platinumgroupservices.com) that deals/ assists your L&F agent AND you directly, FROM THE VERY BEGINNING OF A SHORT SALE TRANSACTION, identifying every aspect/red flag/issue with a specific property and what is specifically involved in that particular property, including identifying issues with title, what the specific lender will require, etc. It is ALL they do, so they are extremely knowledgeable about changes, different requirements, and issues to consider involving a particular short sale transaction.
The good news is that banks would much rather negotiate a short sale than a foreclosure, so they are much more interested in brokering a deal before a foreclosure becomes iminent. This is simply because the loss and risk is generally lower in comparison.
So, there is no simple answer. If you work closely with an agent that you feel is working on your behalf, asking all of the right questions, AND directing you to do the same, you should be fine. I would say that this is your best bet... watch out for any unforeseen problems and get an agent on your side.
All good anwers below. The only thing I might add is that you select an agent that has completed advanced education both on Short Sales and Buyer Agency. That would be a CDPE and an ABR combo. Here's why:
An ABR, Accredited Buyers Agent, has met educational and experience requirements for Buyer agency. We also receive updates and continuing ed on issues relating to representing Buyers in a RE transaction- no brainer., right?
The CDPE- this is not an OFFICIAL Association of Realtors desination- yet, but like the ABR when it started, it is a powerful advanced education that will soon be recognized as an industry standard for dealing with distressed property. NAR started a new program,, the Short Sale and Foreclosure certificate program (SFR)-- I have taken both and the NAR program is NOTHING compared to the CDPE.
Anyway-- many folks will tell you that the CDPE is good for representing distressed Sellers-- but the knowledge gained in that program works GREAT for Buyers, too. Many RE agents are not experienced in Short Sales, so if you have a listing brokered by an inexperienced SS agent, it can be very painful for the Buyer. As a CDPE, I have been very successful in "guiding" a less experienced agent thru the process with better results for all.
LIke Sellers, you might want to consider interviewing an agent to help you. Good Luck! Buying a SS should get easier come April too
You've probably noticed the pattern of advice-have patience,be thick skinned,be persistent,hire an experienced agent not only with short sales, but with "normal" ones too! Listen to your agent, and be willing to follow their advice-especially if they have a track record of success. Success comes from failure-you can benefit from that more than you can imagine. Be willing to walk away when the bank or listing agent don't play nice-which is probably inevitable. And don't deal only with the lsting agent-you need your own agent for a short sale for many reasons.
Like all homes purchases, you want to be approved for a loan before you start looking. Secondly, be sure to tell your REALTOR if you are on a hard deadline. If you need to relocate before the beginning of the school year, move out by the end of your lease, your REALTOR needs to know that information. If the lender has approved the homeowner for a short-sale, the process should go faster than a transaction that has not been evaluated by the lender.