Search The MLS For Short Sales: FAQ & Overview

By
Real Estate Agent with Destin Real Estate Company - The Morar Group

 

 Real estate investors can often make profitable real estate purchases through a short sale.  But because many buyers don't understand the short sale process, they can become impatient and frustrated while waiting for short sale approval.  When considering purchasing a short sale property, it is important that buyer's agents explain the short sale process upfront before a commitment is made.  The goal of this post is to clear up the murky short sale waters.  I've compiled a list of FAQ's and a step-by-step short sale purchase process.  Below you'll find a buyer's guide to short sales: abridged.  

 

As always, I welcome any questions or comments you may have.  Below is the best MLS search tool on the market.  Use the power search for a more finite inquiry, enjoy!   

 

Click here to view all Short Sale listings in Destin, Sandestin, and 30A.  

 

 

Frequently Asked Short Sale Questions 

 

What is a Short Sale?

  • A homeowner is "short" when a borrower owes an amount on his property that is higher than current market value.  A short sale occurs when a negotiation is entered into with the homeowner's mortgage company or companies to accept less than the full balance of the loan at closing.  A buy closes on the property and the property is "sold short".  

Are Short Sales the best deals on the market? 

  • Often, short sales may appear to be the best deals on the market; however, this is not necessarily the rule, as some owners have sufficient equity to sell at market value.  


Should the offer come in well below asking price since it is a Short Sale? 

  • The bank will only accept what is fair market value (FMV) for the property.  A common misconception is that the bank is so ear to sell that they will take any deal.  This is not the case, and banks have been known to reject offers and allow prospective buyers to walk if the offer is not FMV.  

 

Does it matter which bank is making the decision? 

  • Some banking institutions have a longer approval period for short sale transactions than others.  Local banks with a short decision-making chain tend to move more quickly than larger, national banks.  

 

Can we negotiate directly with the bank? 

  • No.  A short sale transaction is between the buyer and seller.  The seller is the owner of record.  Only the seller and those parties acting on their behalf can negotiate the deficiency with the bank.  


Once under contract, what situations can arise that may prevent us from taking ownership? 

  • The bank may reject your offer; the bank and seller may not come to terms with one another (i.e., the bank asks the seller to contribute money in order to close and they are not willing to do so, the bank will not release the debt, or the bank decides the seller does not qualify for a short sale); the property is foreclosed upon by the bank prior to short sale approval.  

 

Can sellers continue to take offers after they accept our offer? 

  • Unless negotiated otherwise, yes, this is to be expected.  It is very common for buyers to tire of the short sale process and walk away.  Back-up offers are insurance for the seller in this case.  

Can you ask the bank to pay all closing costs? 

  • Yes. However, standard buyer and seller closing costs should be expected.  


Will a full price offer or greater than list price offer speed up the approval process? 

  • No.  While the bank will appreciate the offer, the approval and seller's deficiency will still need to be negotiated regardless.  It is important to remember the key is to focus on fair market value.  

 

 

Short Sale Purchase Process

 

Buyers should expect the purchase process to last between four and nine months.  Extensions are common and the purchase process is subject to change as each seller's situation varies.  

 

Pre-Approval or Cash with Proof of Funds (to submit with offer) ---> View Properties ---> Make Offer to Seller (with

copy of EMD check) ---> Seller Acceptance/Counter-Offer/Denial ---> Contract (EMD Due) ---> Package Delivered to

Bank for Approval ---> Bank Acceptance/Counter-Offer/Denial (30-60 days after delivery on average)

---> Contingency Period (Inspection, Financing, etc.) ---> Walk-Thru ---> Closing

 

 

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