Coordinating the successful closing of a short sale takes talent when you are working with a home that was 100% financed with a first and 2nd mortgage and the lenders are taking a 47% loss. Up until now, I had joined the chorus of realtors that steer clients away from short sales due to the high percentage of offers that never result in hopes and dreams becoming reality. But I must say at this time, that if everyone involved in the transaction is really good at what they do, you can get a great deal. It is an AWESOME time to buy whether it is a first time homebuyer or a move up buyer.
Point and case is my daughter who is a recent college graduate. She wanted to seize the opportunity of buying a home that was a steal, the best interest rates, and a first time hombuyer $8,000 credit too boot. She found townhouses and homes that she wanted to put an offer on but was either too late, or a higher offer was accepted. After a few months of looking, she was about to hang up the house hunting and just rent.
Recently that changed. Here is what we found worked:
- When a home is listed for sale, take the time to view it IMMEDIATELY. Drop everything and go, within 24 hours!
- If you have done your homework on the community, neighborhood, home values and financing, IMMEDIATELY make an offer if it meets all your criteria and is what you want. You WANT to be the FIRST offer received.
- If you would like and can do it in your state, put in for a home inspection. Even though the short sale lender won't make any adjustments for defects, etc. it can give you an "out" if when you go back for a 2nd visit or with an inspector you change your mind. (Oh, please don't think badly of me for this one!)
- Have your professional lender contact the listing agent to confirm that a Pre-Qualified Letter is being sent to...have them verify the fax or email address. While they are doing this, have them reiterate that the client is ready to close and a solid buyer. Agents want to work with an offer that will close.
- When they accept your offer. Inquire as to the title company they are using for the seller. Let me reiterate that you DO NOT have to use the title company the sellers are using. You can use the one you are comfortable with.
- Have your professional lender call the sellers title company and interview the closer that will be handling the transaction. How long has the title company been in business. How long has the closer been in that line of work? How long have they been with the current company? How many short sales have they closed? How many short sales are they currently working with? What is the success ratio of closing their short sale files? Is there a difference in a successful closing if a different title company is used? Is there a difference in allowable fees if you do not use the sellers title company? How soon could we get title work to review? To me this call is critical. In this call I learned: 90% of the transaction closed with this closer doing both sides (more incentive!) and 60% with individual title companies; and, the owner's title policy would be paid by the sellers if we used them. Needless to say, I ignored our realtor urging us to use a title company we were comfortable with, AND I forwarded the title work to my regular title company to have them review.
The listing agent had said that because it was the first offered received, it would have first consideration. We offered full price with 3% seller contribution to closing costs and prepaids. I believe because we made the appropriate professional calls it also gave the listing agent a comfort level that he did not want to jeapardize losing. There ended up being NINE offers, one was $30,000 over the list price. The terms of those offers are unknown to me.
The reason I think this worked without a hitch is PROFESSIONALS in all areas - Realtor, Lender, Title. Good luck to anyone looking to buy in 2009 - what a FABULOUS time to buy!
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