I am a first-time buyer in NJ. I saw a house online that I'm interested in but it says it is a Short Sale.

Asked by Laura, New Jersey Sat Feb 16, 2008

How do I go about this? Should I contact the real estate agent listed with the house or find my own agent? What do I have to do differently with a short sale?

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9
Victor Kamin…, Agent, Edison, NJ
Sat May 31, 2008
I would not say you can purchase a short sale home for a substantial amount under market value, that may be stretching it a bit BUT you can find some decent deals and usually get them for slightly below MARKET VALUE.

Please keep in mind the definition of market value = it is the price that a ready willing and able buying is willing to purchase the property for. That being said, the only way you can buy a home under market value is if you beat everyone else to the punch before they are aware of a "Deal" or "Bargain".

Laura, I've got quite a bit of experience with short sales and the first thing is you MUST be working with a real estate agent in order to sell a home as a short sale, in order to purchase its pretty much the same procedure however you must wait for bank approval of your offer even after the seller accepts it. These types of sales can take a substantial amount of time to close as well so if you are in a hurry or are currently renting and the lease is ending, this may not be a great option unless you have a backup place to stay for a while in case the process takes longer then expected.

Using the listing agent vs. any other agent will gain you no particular advantage, it never really should but definately not when a short sale. If you'd like, I"d be more than happy to represent your best interest as your buyers agent.

--
Victor Kaminski
Owner / Broker Manager
Marivic GMAC Real Estate
2056A Lincoln Hwy. (Rt.27)
Edison, NJ 08817-3330
Office: 732-650-9911 Ext.302
Cellular: 908-884-5757
Toll Free: 1-866-745-GMAC(4622) Ext.302
http://www.MarivicRealty.com
http://www.realrep.com
0 votes
Carlos "Alex"…, Agent, North ARlington, NJ
Sat May 24, 2008
Hello Laura,

Short sale can be a great way to buy a home for substantially less than market value. Same issues to consider:

1. The bank (mortgagee) does not own the home, the mortgagee will need to approve the sale of the property, because they will be receiving a lesser amount than the lien they are holding; and the purchaser wants, obviously, to receive clear and marketable title.

2. The owner of the property must sign the contract of sale, without the sellers signature there is no sale. The current owner will own the property until the bank successfully foreclosures on the property. Ultimately, the seller gets $0 at time of closing. This is the reason that most sellers will sign the contract for whatever price the buyer is offering.

3. The mortgagee will check for market value. The bank will not authorize the sale at any price. They will first ask for 2 or more BPO’s (broker price opinion) or even an appraisal to be done on the property. If the difference between the current market value and the offered price is high, they will, most likely, ask for a higher offer (counter offer)

4. Unless the buyer has a signed authorization from the seller, and transmitted it to the mortgage, the mortgagee will not talk to the buyer. This is Federal law.

5. The buyer should not be speaking with the mortgagee directly, anyway. There’s no direct benefit to the buyer. The buyer should instead get a proficient Realtor® with short sale experience, or an attorney with experience in short sales; most attorneys do not have that experience. That is just my opinion.

6. Short sale is not always the best solution. O true professional Realtor® and most attorneys, if the homeowner want to keep the house, should have the “know how” to negotiate with the mortgagee, and defer the outstanding balance to the back of the loan, and may even be able negotiate a lower monthly payment for the homeowner. The homeowner will in essence start fresh, but should not be late again within the next year. Most banks are open to that venue as well.

Wish you the best of luck!
Web Reference:  http://www.exitgolden.com
0 votes
Victor Kamin…, Agent, Edison, NJ
Fri May 23, 2008
As a buyer I'd advise using a real estate agent short sale or not, the realtor will be getting paid by the seller anyway so there is no extra cost to you.

How commissions work: A realtor meets with the seller agrees to list their home for sale in exchange for a percentage of the sales amount for example lets say 6% in this case but the listing agent doesn't keep all that.

Total Commission 6%
Listing agent will offer a portion of that amount to a cooperating brokerage for bringing in a buyer to purchase the home and lets say in this example they are offering 3% to cooperating brokers aka the buyers agent. That is how the realtor gets paid, from the amount that was established between the listing agency and the seller at the time of listing the property for sale. Therefore you won't have to pull any extra money out of your pocket to pay a realtor to assist you in finding a home and representing your best interest.

That being said, let's move on...

We are doing a lot of short sales these days, basically a short sale is nothing new. The concept of short sales has been around as long as mortgages. A short sale is when a seller owes more on their mortgage than the home is worth so in order to sell their home they would not have enough money to satisfy their mortgage with the bank SO...

If you are a seller a bank will only consider a short sale if the seller is using a Realtor, no if ands or buts!
The seller doesn't need to do anything different other than ensure their offer is accepted by BOTH the seller AND their bank(s) if the seller has more than one mortgage. These transaction tend to be more complicated and you need to stay on top of them and the sellers realtor and attorney to ensure they are following up regularly with the sellers bank(s) to ensure all the required paperwork has been submitted to the bank and that it has not been lost in the sea of short sales waiting to be decided if they are acceptable to the sellers bank.

All short sales are "Subject To" the banks approval that goes for 1st, 2nd, 3rd or other mortgages and they can take a long time to get back letting you know if your offer was accepted or not. This is why it is important to stay on top of them. I have one short sale right not, I'm representing the seller and staying on top of things however since the offer came in I've been trying to get a decision for about 3 months now!!!!
This is a bit longer than usual but just so you know, it can take a while before you even get an answer as to if the bank will take your offer. Be ready to wait ! ! ! !

Don't offer too low, if you can find out how much is owed on the mortgages you will see that many banks find 75% payoff acceptable however I've seen as low as 60% accepted but that is not very common.

Good Luck.... and use the Free help a realtor can provide to you, they will also stay on top of the transaction to ensure at the least if they are a bad realtor that the transaction closes so they can get paid which will save you headaches in the long run...

Sweet Deals Ahead! Stay Tuned...

Victor
http://www.realrep.com
Web Reference:  http://www.MarivicRealty.com
0 votes
Kimberly Ram…, , Hackettstown, NJ
Wed Apr 30, 2008
Hi Laura,
You will probably see a lot a short sales listed in today's market. Many sellers simply can't get what they owe on their mortgage in this market. I have listed 4 in the last 9 months. You should know that often a short sale will have multiple offers some of which could be submited by the listing agent so it is probably better to have a buyers agent to represent you. Submit your best offer and be prepared to wait. There is no way to make the bank move fast. They are currently overloaded with these types of situations and there is a lot of paperwork and reviews involved. Make sure that all your financing is in order and you are ready to close when the bank gives their approval. Good Luck!
Web Reference:  http://kimberlyramirez.com
0 votes
Carlos "Alex"…, Agent, North ARlington, NJ
Wed Apr 9, 2008
Short sale can be a great way to buy a home for substantially less than market value. Same issues to consider:

1. The bank (mortgagee) does not own the home, the mortgagee will need to approve the sale of the property, because they will be receiving a lesser amount than the lien they are holding; and the purchaser wants, obviously, to receive clear and marketable title.
2. The owner of the property must sign the contract of sale, without the sellers signature there is no sale. The current owner will own the property until the bank successfully foreclosures on the property. Ultimately, the seller gets $0 at time of closing. This is the reason that most sellers will sign the contract for whatever price the buyer is offering.
3. The mortgagee will check for market value. The bank will not authorize the sale at any price. They will first ask for 2 or more BPO’s (broker price opinion) or even an appraisal to be done on the property. If the difference between the current market value and the offered price is high, they will, most likely, ask for a higher offer (counter offer)
4. Unless the buyer has a signed authorization from the seller, and transmitted it to the mortgage, the mortgagee will not talk to the buyer. This is Federal law.
5. The buyer should not be speaking with the mortgagee directly, anyway. There’s no direct benefit to the buyer. The buyer should instead get a proficient Realtor® with short sale experience, or an attorney with experience in short sales; most attorneys do not have that experience. That is just my opinion.
6. Short sale is not always the best solution. O true professional Realtor® and most attorneys, if the homeowner want to keep the house, should have the “know how” to negotiate with the mortgagee, and defer the outstanding balance to the back of the loan, and may even be able negotiate a lower monthly payment for the homeowner. The homeowner will in essence start fresh, but should not be late again within the next year. Most banks are open to that venue as well.
Wish you the best of luck!
Web Reference:  http://www.exitgolden.com
0 votes
Lucy Korzeli…, Agent, Wall, NJ
Wed Mar 19, 2008
Hi Laura,
Patience is a virtue in buying a short sale. The idea is to be prepared but also realize that once you place an offer to buy, the bank most go through their process as well, usually more than (1) individual is involved in the decision making process. It does take time to negoiate with lenders. And when the time comes and they take your deal be ready to close. Also, make sure that you are dealing with an agent that has gone through the process. If for some reason not all the required paperwork is in place, that would also delay a sale.

Have patience, be ready and find an experienced short sale agent. Best of Luck to you.
Lucy
0 votes
Diane Glander, Agent, Spring Lake, NJ
Mon Mar 3, 2008
The most important thing you can do is get your financing in order. It is a complicated process, but your lender has to know you are purchasing a short sale. The selling institution will not give you much notice when the time comes to close; sometimes only a day. You have to be ready to close on a moment's notice.
Other than the communication delays the other agents talk about, you will inspect a short sale just as any other deal. Have patience and get your $$$. Good luck.
Web Reference:  http://www.dianeglander.com
0 votes
Heather Dacc…, , Monmouth County, NJ
Tue Feb 19, 2008
Hi Laura,
Yes, short sales can be time consuming and getting an approval from the lender may take several weeks. It is best to get a buyers agent to represent you that way they can handle all aspects and follow-up as needed. I recently closed a short sale in Howell, NJ--it took 8 weeks to get an approval and then we had a 30 day closing. If you have any specific questions or need help please feel free to contact me at heather@heatherdaccurso.com or 732-580-5309.
0 votes
;, , Riverhead, NY
Sun Feb 17, 2008
Laura, be prepared to have patience. Depending on the deficiency, there will likely be some back and forth with the lender, and until all paperwork is processed, it can be a roller coaster. It can be weeks before a response is offered, so understand that the agent that you choose will be a prisoner of the process. If you are able to locate a good real estate agent that has experience in short sales (with successful outcomes) it should make the process easier for you- I'd start by seeking out a real estate agent that has demonstrated competence in short sales. If you are successful in obtaining the property, know that the next time around (assuming the absence of a short sale) will be much easier.
Web Reference:  http://optionsrealty.com
0 votes
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