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Ken, Home Buyer in Bay Street Viaduct A...

I want to learn more about, make that need help with buying a short-sale property and have questions...

Asked by Ken, Bay Street Viaduct Area, Savannah, GA Mon May 26, 2008

Such as, Is it best to contact the listing agent direct, or find a buyer-agent? Where is the best place to learn more about the process, and what distress the property is under that it is now listed as a short sale? I saw a foothill property that I liked from the outside, and could even pay cash for the listed price, but what is the real likelyhood that it would ever go through at that price? I own my current home and would perhaps like to get a second/vacation home if I can swing it.

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The likelihood is about 1 in 5 or worse. I am one of the real estate statisticians that researched the percentages of success in short sales. In 2007, Most areas (on average) had nine expired or withdrawn listings for every closed escrow. A success rate of less than ten. I am extremely optimistic to predict that the banks are improving their processes to double the success rate for 2008 to almost 20%.
1 vote Thank Flag Link Thu Jun 5, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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Ken - to cut to the chase, hire a realtor and that person will answer all these questions and more! Don't go swimming with the sharks without any form of protection, because that's exactly what you'd do by not using a realtor! Since the seller is paying the realtor's fees anyway, it would be insane for you not to have your own realtor!
When you say 'Foothill' property, are you referring to the Foothill Farms area or the small mountain ridge to the east of Sacramento known as the Foothills.......for a home to be considered a second home, it normally has to be far away from your primary home, and located in what's considered a resort type area. Keep in mind these rules aren't cast in concrete, but lenders won't budge too much in this marlet.

Though I'm not a realtor myself, I see plenty of good ones on this site. With home pricing starting to near a bottom, and mortgage rates starting to head north, don't wait too much longer!

Good luck and let me know if I can be a resource for you.

Jeff Marr
Stanford Mortgage
916-947-1312
1 vote Thank Flag Link Wed Jun 4, 2008
Ken,
The short sale process is a pain. I would recommend you get an agent to rep you unless you are a very strong negotiator and have allot of time on you hands.
Here's the situation. The listing agent represents the owner of the property but the owner doesn't think thay will get enough from the sale to pay off the note. So what happens is you make your offer and then the owner needs to get the bank to agree to the price. The bank contacts other Realtors in the area and asks for price opinions then decides if they want to accept or foreclose on the property. So in a short sale you don't know if the house is really going to be sold or not. All it takes is one opinion sayig the house is worth more and the bank won't authorize the sale.
All that said if you want this house go for it. Be sure you use the new addendum to the CAR contract for a short sale. I'd use an agent.
1 vote Thank Flag Link Mon May 26, 2008
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
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I suppose I will start by asking - is this the only property you are considering, or are you interested in purchasing a second home/vacation home in general?

If you are just looking for a second home/vacation home in general, my suggestion is to find yourself a good agent who is familiar with the foothills (or whatever areas you are looking at) to assist you. Since you seem to live out of the area, this agent will have knowledge of the history of certain properties, be able to determine market values, know the local terrain, can preview property for you, communicate with the listing agent for you, find out if short sale listings are worth pursuing, etc.

If you just happened to fall in love with this one property and are not going to pursue finding a second home if things don't work out - heck, you can call the listing agent yourself if you are ok with the concept of dual agency (where the listing agent represents both the seller and buyer)...or you could try to represent yourself. Questions you will want to ask are how many loans there are, if the seller has missed any payments, if there is a current notice of default, if there are other offers already submitted to the lender(s), how much advance work the listing agent has done with the lender(s), if there is a Trustee Sale date and when, etc. Most buyers are capable of asking those questions, but knowing the real implications of the answers to those questions is the challenging part on your end.

Unfortunately the asking price of the home is irrelevant on most short sale listings. Fair market value needs to be determined, and if that asking price is just a teaser to get multiple offers or lots of buyer interest, you may need to be prepared to offer more.

My opinion in either case - find an agent you like and are comfortable with...I personally don't know much about the foothill areas surrounding Sacramento, but I am sure someone on this forum does. You can google agents in that area, or ask someone you know for a referral. Good luck to you.
Web Reference: http://www.erinattardi.com
1 vote Thank Flag Link Mon May 26, 2008
Erin Stumpf, Real Estate Pro in Sacramento, CA
MVP'08
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you can get a lot of information and educate yourself just by going on the internet and doing research. always a good idea to learn about these processes.
1 vote Thank Flag Link Mon May 26, 2008
I'm not saying this because I'm an agent -- but you would most likely fare better if you hired a buyer's agent to help you buy a short sale. That's because your own agent can look up the history of the properties, check to see if the Notice of Default has been recorded, look at the comparable sales to determine if the price is even reasonable, and can then help you to select the best properties to pursue. A listing agent typically has one goal in mind, and that's to sell that listing.

Be prepared to wait for an answer on the short sale and for the possibility of multiple offers. Some short sales can take a long time to process, anywhere from 30 days to six months and sometimes longer. Not every listing that is advertised as a short sale even qualifies for a short sale, and most of the time, the listing agents haven't delivered the necessary paperwork to the bank to even know if the bank will consider a short sale.
1 vote Thank Flag Link Mon May 26, 2008
You bring up a lot of great questions, Ken. First, I always recommend you enlist the services of a buyer agent. This is usually something that's available to you at no cost and ensures that you have someone (besides just yourself) looking out for your interests. That agent will also have access to more detailed market information in the area you're shopping and can probably tell you if the property you're considering is priced realistically or if someone just picked a number out of the air.

This brings me to my next point: the statistics for short sales are grim. Only a small percentage (I've heard 2-10% from different sources) of properties listed as short sales actually sell as short sales, with the remainder either being taken off the market and rented or (sadly) going into foreclosure. The irony is that a bank that forecloses might have gotten more money and saved themselves some trouble if they'd allowed the property to sell short.

I recommend finding an Accredited Buyer Representative (ABR) in your area that knows the local market and talk more specifically about the property you're considering. You can find an ABR by searching online at http://www.rebac.net/MembershipDirectorySearch.aspx

Best of luck, Ken!

Rob McQuade, ABR, REALTOR®
McMartin Realty | 2031 K St Ste 100 | Sacramento, CA 95811-4253

Tel (916) 444-7577 or Toll Free (866) 720-CITY (2489)
Fax (916) 444-7977

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Web Reference: http://www.robmcquade.com
0 votes Thank Flag Link Mon May 26, 2008
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