It is imperative not to walk into one or two short sale homes available for sale in the greater Frisco TX area. Some numbers are as high as 50-60% in some communities. Then, there are some neighborhoods that 80-90% that sell are short sales and foreclosures. Hence, it is important to prepare yourself - should you have interests in a property that needs to go through a "short sale" process.
What is a Short Sale? A short sale transaction occurs when a Seller owes more on the loan balance than what s/he could sell for. Property values may have dropped and other foreclosure and short sale transactions in the community did not help either. A short sale is simply a Seller's contingency upon selling. Just like some buyers have to sell their homes first before they can buy another, the Seller must obtain his/her lender's approval upon selling. The principals to the transaction are still the individual Sellers and buyers, not the Seller's lender and the buyers.
If you are interested in purchasing a short sale property, here are some of the tips to have a positive outcome at the end of the transaction:
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Short sale buyers are patient. Extremely patient.
Upon accepting your contract, the Seller pass the contract on to their bank for approval. This Approval process may take weeks or months. In some extreme cases, over a year. However, it is fair to assume you should expect to hear back between 60-120 days. This means that you are waiting for an answer this whole time, not knowing if you could purchase the house. Extreme patience is needed in this case.
If you have time constraints for your purchase, short sale candidates are not for you.
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Short sale buyers accepts defects in the property
Most short sale sellers do not have money to make repairs on the property. Even if they do, they may choose not to spend it on repairs. If you find minor repair items and you still want to purchase the house, you should proceed. But if you expect a non-short sale seller to fork out major money repairs, you will be in for an awakening.
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Short sale buyers may be represented bottom-line numbers and can make a decision about them
After waiting for 120 days (or more), the bank may come back to approve or share with you what the sales price needs to be in order for it to be approved. Most banks leave little or no room for negotiation. It is a take-it or leave-it situation. At that point, you need to make a decision to proceed or move on.
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Short sale buyers accepts No closing costs, no home warranties, no misc. fees paid by Seller
In a regular transaction, it is a negotiation between buyers and sellers about who pays for closing costs, home warranties, and other miscellaneous fees associated with the purchase. Even though the Seller may agree to pay for some closing costs, home warranty as well as other miscellaneous fees (such as HOA transfer fee, HOA resale certificates, etc.), when it reach the lender, the bank to flat out reject them. At that point, you too have to make a decision to pay for those items yourself or move on.
On some types of loans that the Sellers have, some closing costs are allowed.
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Short sale buyers work with experienced short sale buyer's agent for representation
Experience counts with short sales. Your best bet is to have an extremely experienced listing agent representing the Seller and an extremely experienced short sale buyer's agent. By that, I do not mean by just having a Short Sale certification under the tool belt. It is actual work experiences helping short sale buyers navigate the process.
Short sale purchase contracts should NOT be written like a normal transaction. There are more protection needed for the Buyer and Seller. Hence, you want to work with an experience short sale buyer's agent who knows how to best protect your interests in this real estate transaction.
In the end, it is all a matter of bottom line to the Seller's Lender - How much will this transaction NET.
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Contact:
Loreena Yeo
Frisco TX Realtor® / Broker of 3:16 team REALTY
(214) 783-2210
loreena@loreenayeo.com
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Copyright © 2010 by Loreena Yeo (3:16 team REALTY).
Originally Posted on Profile of a Perfect Short Sale Buyer
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Actually seller credits up to 3 percent are allowed on Fannie Mae Freddie Mac properties. Regards from chilly Ann Arbor, MI. info@KathyToth.com