In most of the short sales I have seen, the sellers have paid for the termite/pest report. Whether or not the work will be done is really up to the seller's financial ability, or the bank.
I've not heard about the buyer being responsible for the seller's taxes. On the ones I have dealt with the lender paid the back taxes to unload the property.
Commissions are a bit dicey. It is a matter sometimes of the agents standing up for themselves with the banks, and remind the bank that the contract is between them and the principal (seller) and the bank doesn't have the right to change the perameters of the contract. There are times when our commissions are severely cut. Sometimes as agents we do what we do to help our clients through a difficult time- regardless of our profit margin. It's a give and take world, and those clients will remember the hard work we did to help them out.
Short sales ARE a longer, drawn out process, there is no doubt about it. IF you can get a great deal, and time is not an issue for you, then go ahead. You need to make sure you have an agent who is willing to stick it out for the long haul!
Look, do the numbers. With the unpaid taxes, the agent's commission (agree these are a bit unusual), after you remodel, do the numbers create a profit for you? Do you know what the property will sell for when you're done and do you have a healthy margin in case you find unexpected surprises like dry rot, bad foundation, mold, etc? Some people can buy on instinct, but back it up with good analysis.
agent is the fact that only 8% of short sales actually close escrow.......if there is more than one loan on
the property and the first loan cannot negotiate a settlement with the holder of the second loan....it can
go on for months.....and still end up in foreclosure........plus the buyer has to be alert to the fact that these
can take time...that the lender is not going to make any concessions regarding the condition of the
property.....you really need to do your homework on them. Donna
I think we are going to see more short sales fall through this year becuause of the willingness of the banks to modify loans and keep the owners in the home.
Back to your question. Write an offer. It takes only half an hour or so. But don't stop looking.
I will be very happy to help you. Please do not hesitate to contact me at 877-Lee Sells. I live and work on the north and mid peninsula as well as the east bay.
Lee Ginsburg -Prudential
- Homeowner did in fact insist on rolling his back taxes and other "goodies" into the offer, as well as a boosted commission for the selling agent (? are you kidding ?) - all told these items raised the price by about $20k and seem totally unscrupulous because the seller gradually added these things over a month or more, stringing us along so we'd go along with it just to close the freakin' deal. This was annoying, expensive and added a lot of time to the deal.
- The bank took forever to respond, and all told the negotiations took 3 months. The seller had 2 mortgages, endless back taxes and fines, etc. and this stuff boogers up the sell in a big way - every party has to agree to the deal, as if waiting on ONE bank wasn't bad enough...
- On the day we were supposed to get our final word of acceptance and everything was in place, the selling agent magically lined up another buyer out of thin air who would pay the same price but without contingency of inspection, and the bank accepted their offer on the spot without even giving us a chance to match it or negotiate. This is a short sell for you, talk about frustration.
All told, it was an absolute nightmare experience and I will NEVER bother with that again. The agents hate it, buyers who have "been there" hate it, and there is a good reason. If you're bent on getting a foreclosure deal, I would avoid the shorts and go for REOs, at least then most of the "interested party" complications are out of the way. And finally, I would just say that your gut shouldn't affect your decision more than the vast first-hand experience of others!
We don't believe your agent would argue the point that "short sales" can represent great opportunities for today's buyers. But these opportunities come at a price.
1. extended time to closing
5. the vast majority of offers do not close
6. lost documents
7. no response to phone calls or emails
8. requiring 4-6 months to close
9. lack of empathy for the sustomer
10. waiting months to find the property was sold to someone else
12. etc. etc. etc.
When you have been stung by one of these transactions it's rather difficult to embrace another one and risk putting another customer through an ugly experience.
Your agent needs to be properly compensated; it takes a lot more wore work than a regular transaction and a lot of times not close it (a waste of time).
On the other hand, you need to look at the pros & cons of your investment and make sure you will end up making money; otherwise, it will be disappointing.
Banks take as many offers as they can, pick their best, and possibly counter it in an attempt to sale the property at "market price" and in "as is" conditions. You, the Buyer, are responsible for all your inspections; even to activate some utilities like public water. They will penalize you, the Buyer, for every day you are late to closing. I have not experieced where than Banks ask the Buyer to pay for back taxes, but it is all in the counter offer; market price. Remenber?
Do your homework. Most of the time you, the Buyer, may end up with a cleaner and better deal from a regular transaction.
Wishing you best,
I am glad that I asked this question here. Yes, I am looking for a home to live with my family.
My agent did work on short sales before and she once listed one for a lender. In that case, the new buyer had to pay about 20,000 on top of sales price such as unpaid HOA, prepayment penalties etc. It could get complicated even more if it is involved with two or more lenders as she said. It took some time for her to close the deal.
I am ok with other stuff but the case that Maureen described, is a bit scary for me. As time stretches, other bidders could jump in and drive the price higher. I talked with my agent more on short sale issues and she agreed on that she can work on it if I want. But I will not jump on it right now. I will examine the risk more carefully and decide my last move based on that.
Thanks a lot.
Depending on situation, I may change my mind.
longer and there is more uncertainty. We did not hear back from the bank for 7 weeks and there were 3 competing offers. There have been a lot of other issues that would not have come up if we had only been dealing with a seller. The bank had two appraisals done, so the house is being sold at market value and "as is." We can have an inspection though.
If you can find a regular house, I would recommend it. But if it really is the house you love, then sit it out.
Ask to see preliminary title work and HUD. This will give you a true idea of how the costs are being distributed.
The other thing is that the agent who is negotiating with the bank has to be experienced at what they are doing. She has a buyer for the property that the bank does not want. she should be able to negotiate the taxes, commissions etc. so that they are paid by the bank. But your agent is probably not the one negotiating with the bank.
Ask your agent about her personal experience working short sales so you can get a better feel for where she is coming from.
I find that the buyers usually are not that patient. I don't know if you are an investor or a end user. As for commissions they always try to negotiate, I am willing to call their bluff, they are not going to buy it back for a small amount.
You'll also have to consider that many of the short sales on the market these days involve more than one lender which complicates the matter as the second is usually offered very little and has very little incentive to cooperate. Many times the second will wait till the last minute (i.e., shortly before the property is going to auction) and most buyers eventually lose interest because of the hoops they have to jump through.
You'll also have to expect to pay for all the inspections yourself and you have to go into the transaction knowing that the seller will not be able to repair anything or offer any repairs. You may end up paying for reports just to find out that there's too much wrong with the property to make it a wise investment.
I think your agent has some valid reasons for disliking short sales and you should not jump to the conclusion that the agent just does not like them for self-serving reasons. I would definitely not limit my search to short sale properties only as banks don't jump at the opportunity to sell below fair market value. A short sale only means that the owner owes more money than what he/she can get for the property. It does not mean that the buyer gets a good deal. Good luck,
Definitely do your research. The agent's commission would be wrapped into the sale price. You CAN have your inspections done and you should never buy a property without doing a proper inspection first.
Escrows seem to be taking longer and longer these days. It sounds to me like your agent is trying to save you a headache and maybe she has never done a short sale and does not know what is involved. It sounds like a bit of misinformation or miscommunication to me.
Continue to do your homework and make a wise decision!
Anthony gave you really good suggestions - from his previous answers, he is a seasoned real estate investor.
I agree that there are a lot of catches to a Short Sale; the agents, buyers and sellers all have to be educated so they are prepared to handle any situation that might arise and also be prepared for a lengthy waiting period and find out the lender did not approve your offer; all these can discourage an agent to deal with that. I am not sure of the 'agent's commission to next buyer' , I do know that lender will often negotiate down the commission offered to agents, which might again be something looked upon unfavorably by the agents. .
However, you are the one who is interested in the property and want to buy the house - after you look at all the facts and details, and if you are still willing to invest the time, money, and are O.K. with the uncertainty of the outcome to purchase this house, I don't see why your agent should refuse to help you in this deal.
A lot of times sellers do not provide inspection reports and the buyers have to get their own inspections - which I strongly recommend as sometimes a short sale property can be not well cared for; make sure you get a title report so you can make sure all the liens are cleared by your purchase,
Again, as a buyer, you should not worry about the commission; unless your agent make you sign something to the effect that if he/she doe snot get a specific percentage he/she deemed proper for the service, you will kick in, but that's unusual and only if you consent.
Short sales are very common now. CAR (California Association of Realtors) and our local realtor and MLS boards are coming out with new rules / clauses as items pop up. Make sure your realtor stay current with those things.
I just presented a short sale offer, but my buyers are well advised of the pros and cons of the short sale and they are willing to participate. I did not ever mention the commission part to them (I should be paid by the sellers not buyers, so they don't have to worry whether I get any commission or not).
Good Luck on this!
My understanding is that you may be able to purchase a short sale property at up to 10% below the market value. But it is a lot of work and requires tons of patience on your part. You could be waiting 3 or more months for an answer from the lender, which then could be no, we won't take your offer.
Keep in mind that you'll be negotiating with the lien holder on the sale price, not the seller.
She knows your circumstances. She could be trying to save you from a lot of disappointment, frustration and waste of time. Short sales can be all of that.
What does your gut say? Have you worked with her before? Was she referred to you by a reliable friend?