What you need to know about buying a short sale home:
Short Sales have no rules about price, time frames, closing dates, and condition of property. The banks don’t want the properties back due to the amount of inventory and the loss of value when a property forecloses. Most people would think that they would do anything and take any price to move these properties. Since the bank is losing money on short sales they put as little amount of money and people to work on them causing a back log of files that can take 3-6 months for a buyer to get to the closing table on a short sale.
If you are looking to purchase a short sale property you need to have patience. You should be getting a deal since the property condition is typically in better shape than a foreclosure. There is no automated system yet for short sales so your fate will have a lot of factors riding on it and until your sitting at the closing table with a signed deed, approved hud and keys in your hand, nothing is guaranteed with a short sale purchase.
Problem one: The negotiator at the bank. Typically the negotiator is under paid and they have a stack of short sale files ranging between 50-200 at any give time. It may take two weeks for a negotiator to respond to an offer and if there is counter offers it will take longer. If an agent doesn’t treat the negotiator with respect the file could end up in the trash and the agent will have to resubmit the file which can take weeks. Some negotiators are just bad and an agent may have to have the file cancelled just to get a new negotiator and get an acceptable sale price.
Problem two: Time and condition of the property. The bank doesn’t care when you have movers setup or when you have to sell your home or any other factor. Most Short sales that we have done have had to be extend due to some unexpected situation. The Negotiator will submit the file to the investor so they can review the loss. The investor may not care if the property is damaged or needs work. They just look at how much they can afford to let the property go for.
Problem Three: The bank may want the seller to bring cash to closing. Normally if a seller is short selling their home, they don’t have money to bring to closing for the lender. This can cause for delays with the file.
Problem four: The first mortgage and the second mortgage don’t agree on amount that should be given to the second mortgage. Not all mortgages are with the same company and the second hold up a closing if they don’t get what they want. If the property forecloses the second mortgage can still go after the homeowner.
These are just some of the problems you may face in the short sale process. Don’t sweat the details since most short sales work out in time.
I recommend you have a backup plan and a exit time frame if you feel it is taking to long. If you have time issues and have to move in a hurry due to home sale or lease ending, just stick to seller homes and foreclosures. If you have the time to wait and really love a home, go for a short sale and see what kind of deal you can get!
If you have questions or would like to hear about some of the deals we have got for ourselves and our clients, give us a call at 612-284-8161 or send us an email using the contact form below.
If you have any questions or comments, please post below or contact me at the following :
Dale Frisch 612-284-8161 or Dale@AttractiveRealty.com
We are not lawyers or tax accountants and you should always seek the advice from a professional
regarding legal or tax questions.
For a Free legal consultation on Real estate matters, Short Sale/ Foreclosure or Bankruptcy
Contact Nathan Nelson with Virtus Law PLLC 763.432.2169 Or Info@virtuslaw.com
Click here to visit their website
Comments or questions are welcome.