Many (most) buyers today are really looking for a "deal" and often equate the term "short sale" with "deal". This may be the case, but then again, it may not. If you are a buyer anticipate making an offer to purchase a property that will be a short sale, the best way to do so is with eyes wide open as to what you may expect. Here are a few things to consider before going forward with an offer on a short sale....
1. Short sales take notoriously long, easily several weeks to several months depending on the bank that holds the mortgage, the listing agent and the particular circumstances. You may not hear anything for weeks at a time, which can be quite frustrating as you may start to feel like your life is on hold while waiting to see if your offer is accepted.
2. Unlike a normal purchase and sale, multiple offers can be submitted to the bank so even if you were one of the first offers in, another stronger offer might come in and the bank may decide to go with that offer and never even counter back to you. Many deals we are seeing have multiple offers, one recently had 25!!! This means you need to go in with your highest and best offer from the start, not expecting wiggle room in counter-offer negotiations.
3. Much of your fate will depend on the follow-up and competency of the listing agent. You will neither know, nor control either of these. Short sales are exceedingly frustrating for listing agents who have to work much harder and for often lower commissions than normal sales. If they are not diligent, follow up repeatedly, have their documents in order, etc. your chances of your offer being accepted may be hindered.
4. Surprises have a tendancy to pop up at the last minute that may kill the deal. Unlike normal sales where the seller is normally walking away with some cash, the sellers in short sales have no cash and therefore cannot throw money to settle something, even something small. The banks are often also not willing to kick in the extra dough. Minor liens on the property and other issues and judgements might not surface until late in the process with no lifesaver to remove them, keeping you from getting a property with clear title.
5. There are very good banks to deal with processing short sales that are organized, informed and well staffed. There are also some really horrible banks that are understaffed, bounce you around, loose documents and worse. As in item #3 above, you will neither be able to know nor control this and it may also be very frustrating.
Rememer, a short sale is determined by how the selling price compares to what the seller OWES, not to market value. A "deal" is how the salling price compares to MARKET VALUE! You can have a short sale that is in no way a "deal" and you can have a non-short sale that is a great deal.
A deal is all in relation to the current market value; not what the seller bought it for, not what the seller owes, nor what other properties are LISTED for on the market. A deal is how the property compares to recently SOLD similar properites and if you use that as your guide, with a short sale or with a "normal" sale, you will do well. Remember to work with a knowledgeable and informed Realtor to help you find and negotiate your purchase!
Janie Coffey, Broker, GRI, TRC
Papillon Real Estate, LLC
786-252-4970
janie@janiecoffey.com
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Janie Coffey, GRI - Miami Real Estate
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Janie,
Have you worked a short sale with Washington Mutual? Any names of a Loss Mitigation person there? Any hints on how best to work with them?