In today's world of real estate there are many opportunities for good deals. Foreclosures, motivated sellers, and short sales are examples of some of those opportunities. For those of you who may not have heard the term "short sale", a simple explanation is that a homeowner is trying to sell their home for less than what they owe their lender and are asking them to accept that lesser amount and also cover the expenses associated with the sale. On the surface that may sound as if it should be really simple, however it is much more involved than you the buyer may realize. I have handled numerous short sales in the Spartanburg area, many before most agents even knew what a short sale was. Over the 12+ years that I have helped people to buy and sell homes I have managed to handle some short sales successfully, some unsuccessfully and have found them to be difficult, challenging, frustrating, and rewarding! Rewarding because homeowners who desperately want to sell their home as a short sale rather than go through a foreclosure are extremely appreciative of their agent helping them through such a stressful time in their lives. It is critical that short sale agents be compassionate, empathetic, and sympathetic, as well as being a good listener! Unfortunately, bad things happen to good people and any of us could end up on the verge of losing our homes!
As a buyer there are things that you need to understand about short sales.
- Rule # 1 -- Patience, patience, patience! Do not expect daily or even weekly updates! Your agent cannot make loss mitigators or negotiators communicate with them. Quite often the attitude is "when we have anything to tell you you will hear something. When you don't hear anything then we have no news!" This is not your agent's attitude so please understand when there is no news it is not for lack of concern or effort on your agent's part.
- Understand if you need to be in a house in 30 or 60 or even 90 days then attempting to buy a short sale may not be for you! Short sales can take months sometimes! When you start to get impatient remember Rule # 1!!
- The process is so much more involved than you and possibly even your agent realizes. There are so many "layers of approval". For example there is the mortgage insurance company and the investors that have to approve the sale.
- There is lots and lots of paperwork involved! Quite often the listing agent has to send the same paperwork numerous times since there is a "black hole" that some of it disappears into!
- Many lenders will not approve Home Warranties and quite often will limit the amount of closing costs on a short sale.
- Quite often short sales are "AS IS" sales. If the house does not meet your lender's requirements for financing you may either need to look at a different type of financing or move on to a different property.
- Understand that you still need to be reasonable with your offer. Usually a short sale is already listed significantly below normal market value. Your agent can advise and counsel you as to an appropriate offer based on comparables and an evaluation of the condition of the property. Short sale homes may have deferred maintenance issues that could affect value.
- Every short sale is different! Sometimes the list price is approved by the lender and sometimes the listing agent is just trying to generate interest by dropping the price. Don't assume that the list price is the price the bank will approve!
- Quite often the agents commissions ( ie: paychecks) end up being reduced by the lender even though the agents are doing alot more work to try to get this worked out for you and the seller!
- The lender will order BPOs (Broker Price Opinions). The information that the BPO agent will primarily use will be recent sales from MLS (Multiple Listing Service). Again as stated above be reasonable with your offer. More than likely you will get a good deal but making a ridiculous offer will not help you to get the short sale worked out!
- Remember - this process is just as frustrating for the seller and the agents as it is for you! Your agent wants you to get the house you want for the price and terms that work for you! The listing agent wants to get their seller out of the situation they are in without a foreclosure on their credit. There is no advantage to any of these parties to drag their feet. Basically all parties have the same goal! Everyone wants to make it to the closing table!
This is just an overview. It is not intended to be a complete list of everything involved in a short sale. Hopefully this overview will help you understand more about short sales and what is involved, and help you to appreciate the efforts of all parties involved!
After all of this if you decide to make an offer on a short sale, remember Rule # 1 - patience, patience, patience!
If I can help you or anyone you know please feel free to contact me at Linda.Rademacher@century21.com or call me at 864-909-2500.
And please visit my website at http://www.sellingupstatesc.net/