The Buyer must be patient and prepared for a long drawn out process that will seem to be unfair and frustrating at times.
1. The price seems too good to be true. In most cases it is because the agent has been reducing the price in hopes of getting an offer. The majority of the lenders, especially the holder of junior liens, will NOT give a price or discuss price before there is an offer on the table.
2. A full price offer might not be enough. Remember, the bank isn't the listing agent of a short sale property. It's the seller and their agent making all the decisions. There will almost always be a problem if the price has been reduced far below what is owed on the property or worse yet, listed initially at a low price. The Seller's signatures and the promises of the agents are insignificant. The lender is now involved and they will protect their bottom line in spite of logic.
3. It can take months for a lender to respond to your short sale offer. There may be approval from several people or agencies to get an approval. Investors, Private Mortgage Insurers, FHA, VA, FNMA, Freddie Mac are among the most common. It simply complicates the process if there is a second mortgage involve.
4. Negotiations seem unfair and NOT in good faith. You may spend a couple weeks negotiating with the Seller. The offer than goes to a third party negotiator that is in contact with the lender(s). They counter with more money or different terms and negotiate with you over the next month. You reach agreement and the lender finally receives the purchase and sale agreement. They do their final calculations and counter with a higher price or a change in terms. This certainly seems unfair but it's the only system we have.
5. Your Buyer's Agent does NOT have access to the lender. I may seem that your agent isn't doing enough for you. Why are they not on the phone talking to and negotiating with the Seller's lender? It's because the Buyer's agent does NOT have access. Even if they did, the lenders rep wouldn't want to talk to them. The banks process is set and the decision to accept an offer is made by that process. It's documented. Yur Buyer's agent only has access through the Listing Agent and sometimes the third party negotiator.
6. The Seller and the lender will NOT want to pay for back taxes, assessments and other liens against the property. The Seller is walking away from the property and has no incentive to pay any monies owed against the property. The penalty is the same with or without payment. The lender is just looking at bottom line.
7. They lender(s) will have a target net for that property. The lender will walk away from a purchase and sale that does NOT meet that price. It's all about bottom line and a little about terms. Notice that short sale properties in good condition and good areas are selling for the same or slightly less than a normal resale property.
This list could go on and on. I hope that you get the picture. You just might concider purchasing a normal resale property if short sale properties in good neighborhoods that are in good condition are driving the prices. Knowing that the property will close without all the unknowns and frustratons can be worth thousands in the long run. There are still those cases where the Buyer waits months for the process to conclude only to find that the sale fails and they ae back looking for a home.
Be patient and be sure that this is the path you choose. Wath for my blog on purchasing bank owned properties.
Comments(3)