short sale 5
Short Sales In Woodland Hills California- This
short
sale series is to help sellers, buyers and their agents understand the
complexity of using the Short Sale process as an alternative to
Foreclosures.
What
You Need to know if you are buying or Selling
Do
You Qualify to Do a Short Sale In Woodland Hills California
What
You Need to Have In Your Short Sale Package
The
Process of The Short Sale What's Next
This
post Is about how do we Make a decision
regarding the amount we are going to offer on a short
sale, myths
and
truths about the right
prices on short
sales.
There
is a hough amount of wrong information
regarding how much you can buy
a short sale for. There are people who are watching too much late night
TV, seeing these so called gurus that tell you how to get rich fast
by buying real estate at 50 cents on the dollar and with no
money
down.
MYTH- The lenders have so many
properties and are so desperate they will accept any low
amount that is offered on a short sale.
TRUTH- The
lenders prefer to work out a feasible agreement
with the homeowner. Lenders have a formula they use to determine the
amount they are willing to lose and
what the actual net proceeds they will accept at a short sale closing.
MYTH- Lenders are just siting
and waiting for your low offer!
TRUTH- Lenders have a
policy they follow, the policy is : The seller's agent submits
a short sale package, with the short sales offer from the buyer, At
that time the lender orders a BPO, the BPO is a Broker's Price Opinion,
This is not a regular appraisal, the lender is paying the agent
somewhere between $50 to $100 to do a BPO, versus $400 to an
appraiser. That usually takes 5-10 days to complete.
Once the BPO is back they figure out
their formula , the lender sends us a statement with the
amount they need to net from the property, the BPO is usually the
amount of similar properties sold. The lender will accept about 5%-15%
less
MYTH- You can offer as
low as 30 cents to 50 cents on the dollar of what the listed price is.
TRUTH- The above statement is NOT
true. The lender will take a small discount off of the BPO value. They
want the offer to be right below market value.
The list price is not your starting point in the
negotiations on a short sale offer.
You must pull up the county records and check to see how much
the owner owes
to the lender. You will look to see if a notice of
default has been filed. You
will also need to take into consideration that if this house is in
in default there are other bills they most likely have not
paid for and affect the sale of the property.
Those are:
- Second notes or home equity lines of credit
- Unpaid HOA fees and related attorney's collection fees
All of these are going to have be paid at the
closing.
The seller is not likely to have these amounts of money at closing, the
additional expenses will be part of the lenders closing fees, which
they will have to approve and be reduced.
Once you know the amounts the seller owes on his/her
property you will have a a picture of as to how to structure your
offer.
If this short sale is in Woodland Hills
California
it is very likely that you could get the property for 70 cents on the
dollar on what the seller loans are, NOT what the list price
is. The list price is usually very close to market value. This is where
the misunderstanding comes in for most offers.
You must look at what is owed to the bank versus
what the market value is; the list price.
The lender is actually reducing the loan down to the market value which
can be a reduction of up to 50% it depends on the market area
you are in, some have dropped that much
in the last couple of years.
Many times you can get a better idea if you are a buyer by
making an offer on a property that has equity
in it and the seller is motivated to accept a lower than market value
offer. When making an offer on a short sale you must have allot of
patience. If you need to be in a house at a certain time ,
trying to buy a short sale that is at the very beginning
of the process and there is no BPO yet on the property, its
most
likely not in your best interest to pursue the
offer.
You can
ask your agent to find short sales that already have a BPO from a
previous offer, and the original offer is no longer on the table. In
this case you know the amount the lender will
accept as his bottom
net and you can decide if you want to pursue with buying that
property. In this situations we can close the purchase rather
quickly, usually
within 4-6 weeks.
So make your offer based on TRUTH not MYTH.
Disclaimer:
This post is not intended to be or to provide legal advice. We
recommend that you speak to your tax accountant
regarding specifics and to find out if this is the best option for you
in your situation.
The information provided herein is
supplied by several sources and is subject to change without notice.
Woodland Homes and Estates Blog does not guarantee or is any way
responsible for
its accuracy, and provides said information without warranties of any
kind, either express or implied. Entries on Woodland Hills
Homes and Estates Blog
represent the opinions and ideas of the author(s). .
Contact : Rachel Zeppinick @ 818.288.7255
Copyright © 2008 By Rachel Zeppinick, All Rights
Reserved.Short
Sales- Part 5 Short Sale Myths and
Truths About Offers. * Contact Rachel
Zeppinick for Customized Listing packages.
Visit my profile
to find out more about our services. Call us today at 818.288.7255.
Contact us by email if you prefer by clicking
on email me on the right side of this page under my profile.
P.S. If you are listing your home as a short
sale in Woodland Hills California make
sure you hire an agent who knows how to do short sales and has the
experience to get the job done. We are doing successful short sale
packages. Call us at818-288-7255 to find out more.
;)
;)
