Short Sales

 I was pregnant trying to get in home before our baby boy was born. We came upon a home that we fell in love with and it was a shortsale… We obviously knew that we were taking a chance at not getting in the home before our baby was born. We  loved the home so we took the chance. We  got in the home 2 months after our beautiful baby boy Landon was born and couldn’t be happier. Honestly we were willing to wait.  It is a great home and we got it for a great price.  Total wait from contract to close was 6 MONTHS! Every shortsale situation is different and it all depends on all parties involved in making sure it goes  as smoothly as possible. Please read some of these tips to assist you in understanding short sale transactions. If you know what to expect before you take on a short sale it doesn’t seem as hard to deal with.

We will inevitably come across one or more properties currently classified as a short sale. A short sale is when the current owner sells their home for less than what they owe. The short sale process in contingent on the banks approval of the sale and the sellers approval of the banks selling terms. Lenders are motivated to approve short sales because it eliminates the costly process of foreclosing, clearing, and reselling a home. It’s important to understand some things when considering purchasing a short sale:

1. Price is usually set by the agent & seller, not bank: The agent and seller sometimes create a very low asking price in order to attract buyers. The bank is normally unaware of the asking price; how-ever, the bank has the final say in what an acceptable offer will be.

2. 1 Mortgage is better than 2: If the seller has loans owned by two different banks it is a lot more complicated to approve the short sale. Both lenders have to approve the sale and agree on a settlement amount between them.

3. Low offers get slow or no response: When a very low offer is presented to the bank they are typically rejected. The bank is looking for 90-95% of fair market value. A good listing agent will have the seller reject the offer, because it could delay the short sale as the time clock is ticking toward foreclosure.

4. Short sales are not short: It can sometimes be a very long process (60 to 120 days). Buyers should be willing to be patient through the process and be committed to the home if you decide to make an offer.

5. Sellers may be asked to pay the difference: Sellers that have high income or assets may be asked to pay a portion of the loss to the lender. This has virtually no effect on the buyer as long as the seller cooperates. If the seller chooses not to cooperate, then the sale would not go through.

6. Short Sales are sold as-is: If there are repairs or improvements that need to be made on a home, even if they are necessary to get a loan, it is very unlikely that they will be done. Short Sales are typically as-is. Buyers are sometimes asked to turn on utilities for inspections and/or make repairs that their lender would require.

7. When we get approval, we must close on time: During a short sale there is no leniency with the closing date. Because of this, it is important to take care of all loan paperwork immediately. I advise buyers to be extra prepared and try to have the loan finalized a few days in advance of the closing date. Short sales can be a great opportunity to find your new home at a competitive price. A Short sale can also be a challenging transaction that lasts for months. It is important to have a good understanding of the factors that lead to a successful short sale to make it an enjoyable and profitable experience. Ihope that these tips will help you to remain positive and optimistic throughout the process.