Short Sales, love them or hate them. That premise starts with the Short Sale qualification and experience of the listing agent . Buyer's agent has to understand and know a Short Sale's ins and outs to educate the Buyer, however the listing agent is in the driver's seat to maneuver the transaction from pricing it accurately, accepting the best offer from the most willing and qualified Buyer(s), communicating with the lender(s), to closing or failure.
To successfully purchase a Short Sale the following are a must :
-Be prepared to wait from 45 to 120 days fro the entire Short Sale process to go through
-Be pre approved for a loan and have closing costs
-If your offer is accepted by the Seller, the listing agent will submit it to the lender(s) with his/her market evaluation to justify the purchase price, and a HUD statement (closing statement) that reflects the net proceeds to the Bank after closing, this starts the Short Sale
-Escrow is opened, a 3% good faith deposit is required
-Lender(s) will review the offer and all other documents, within 1-2 weeks will order one or two a BPOs (Broker Price Opinion) and possibly an appraisal to verify listing agent's market value of the property. This process can take about 10 business days. With the information from the BPOs and appraisal the lender will decide if Buyer's offer will be accepted or counter offered on price and terms (most likely the closing date and some of Seller's closing cost which Buyer may have to pay for)
-If lender(s) accepts the offer as is,a written letter of approval is sent to Seller which includes the final terms.If Seller accepts approved terms the letter is forwarded to Buyer and his/her agent for acceptance. If acceptable Buyer proceeds with inspection contingency and loan contingency.
-Inspection contingency can vary from 7 to 14 days, if any issues are discovered at inspection and Buyer does not wish to accept the property with the discovered defect can either submit a request for repairs or cancel contract.
- In a Short Sale properties are sold "AS IS" no repairs, because Seller , who is in financial distress, does not have the funds to make said repairs or give credit to Buyer to cover for their expense. The Banks may allow very limited repairs ,if at all, such as termite, retrofitting and regional disclosure reports.
-Buyer's lender will order an appraisal as well, if this appraisal comes in lower in value than the approved purchase contract, Buyer can either cancel or submit a request to Seller's lender to adjust the purchase price based on the most recent appraisal. Seller's lender(s) can take 3-10 days to review the new request.
-Seller's lender(s) can either accept the new purchase price or decline.
-Buyer can either pay the difference in order to close or cancel contract and request the 3% good faith deposit back.
No Short Sales are alike , approval or rejection of an offer weigh on listing agent's ability to negotiate a good offer and Buyer's flexibility of what is acceptable if the house is not in "perfect" condition.