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Help! What Are The Top 5 Current Questions About Real Estate Short Sales?

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Real Estate Agent with Broker, Dills Real Estate

Help! What Are The Top 5 Current Questions About Real Estate Short Sales?

Folks (friends, colleagues, fellow Realtors, lenders, appraisers, virtual assistants, non-real estate professionals including potential short sale sellers and buyers, etc.), I'm looking to write a book about real estate short sales.  In one section of the book I would like to provide in-depth answers to CURRENT questions that any party to a real estate short sale might have.  I'll be "paying it forward" by providing the answers to the questions; but, I'll also be receiving value by being able to document the most relevant and current questions.

If you have a question (and I know you do!) that you feel might fit into my description of "The Top 5 Questions About Real Estate Short Sales"; please, please, please ask the question in a comment to this post and I will return the favor by giving you a well-thought out, based on experience, current answer to your question. 

FYI: Distressed sales (Short Sales and REOs) are currently making up about 50% of residential resales nation-wide.  Additionally, short sales are about 33% of the distressed sales and that figure is increasing.  Hopefully it will continue to increase as agents stop shying away from short sales; banks start being more pro-active facilitating short sales - and saving their investors $$; and home-owners start coming out of their shock brought on by the myriad hardships that are the causes of distressed situations AND EDUCATE THEMSELVES about their real options instead of letting things happen (i.e., by doing nothing).  Unfortunately, statistics show that the vast majority of homeowners do nothing.

So, fire away with your questions!  Please!

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If I can provide more information about real estate in general and the local housing market in particular in Fort Worth and the surrounding areas, or otherwise assist you, your friends or family in a home search, please contact me by phone or text at (817) 495-8028 or email me at Kent@KentDills.com

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Comments (2)

Jill Kipnis
Move, Inc. - Westlake Village, CA

Hi Kent, One of the recent questions we received was, "How low can you offer on a short sale home?"

http://www.realtor.com/blogs/2011/05/02/how-low-home-short-sale-offer/

May 03, 2011 09:03 AM
Kent Dills
Broker, Dills Real Estate - Bellingham, WA
Real Estate 817-495-8028, Bellingham, Washington

Jill, thanks for your question and, yes, it's always a relevant one!

Some background is needed to understand the answer.

First, the banks that are reviewing and approving (or not) short sale offers are not in the business of giving away their assets (on their own or their investors' behalves).  So, when looking at an offer, the first thing they will do (after getting all the support docs like pay stubs, tax returns, bank statements, etc., together) will be to get an independent valuation on the subject property.  They'll do this by ordering an appraisal or BPO.  In my experience, it doesn't matter if it's an appraisal or BPO - they should and do come in about the same if it's done correctly.  That's a big if - and sometimes I have to work REAL HARD to contest or counter bad valuations - but that's another story.

Second, once the property is properly valued, the bank has to compare the valuation against the applicable short sale net guidelines (in-house guidelines if a portfolio loan, or whatever the applicable investor's are if Fannie, Freddie, FHA/HUD, etc.)  Usually investor guidelines state that they want to NET (gross sales price less commissions and closing costs) between 84-88%.  This is for FHA/HUD loans.  VA is a little higher and there is a little more "wiggle room" if conventional (Fannie, Freddie, portfolio).  

That said, a good "rule of thumb" I use and has helped me be successful on lots of short sale with lots of different banks is that I try to aim for a gross sales price of between 90-95% of what I estimate the value to be (I do my own BPO), and then I'm usually successful at ending up somewhere in the approval range for the investor's net requirements.  I work with buyers who are mainly owner occupants and who are happy to get a 5-10% discount off of full price in return for the uncertainty and patience required when working through the short sale process.  This seems to be where the win/win/win comes in for the banks, the sellers, and the buyers. 

FYI: For those folks who've gotten coached or trained by the "gurus" and think they can purchase short sales for 60% of value; good luck on that!  They might be successful 5 out of a 100 times (or 0 out of 100 for that matter) but I don't run my business working on super low odds like that.  The sellers I represent want and need me to be successful more like 90-95% of the time versus 5%. 

Got it!  I hope so!  

May 03, 2011 10:07 AM