The ABC's of Buying and Selling Short Sales in West Michigan...

By
Real Estate Broker/Owner with Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate
https://activerain.com/droplet/4kj9

 


Sifting through the facts...

Sifting through the facts...

Purchasing a new home is one of the most exciting experiences an individual or family can have.  If you’ve been out of the real estate market for some time, you may be unaware of some dramatic changes in the real estate market landscape. 

In today’s market, there are some unique situations which home buyers should be aware of as they prepare to consider the purchase of a new home.

GOOD NEW FIRST…

The good news is that home buyers in the Grand Rapids, Michigan area will find that they have a bountiful number of choices for a new home purchase.  Inventory levels of homes for sale are at historic levels.  In addition, mortgage rates continue to remain low.  Homebuyers can still get a lot of bang for their buck!

HOW THINGS HAVE CHANGED… 

However, home buyers looking for a home to purchase will also quickly become aware of a notation which currently accompanies a significant number of the homes listed for sale in  the Grand Rapids Multiple Listing Service.  This notation which is accessible to the real estate agent on the listing card, will indicate an advisory warning indicating that interested parties should be aware of the fact that the sale of the listed home will necessiate a ‘Short Sale’.

If you’re a brand new home buyer or recently re-entering the market, this  may prove perplexing and you may wonder…What is a Short Sale?

SHORT SALES IN BRIEF…

Well, in short (pun intended)...a Short Sale has the ability to turn into the longest real estate transaction you've ever heard of.  Although, my shortest negotiation was completed in 10 days, the average Short Sale requires 60-120 days.  One transaction took seven months!

A Short Sale can be defined as the sale of a home priced below the mortgage balance owed on the home. (after costs associated with the home sale are paid)

WHAT DOES THIS MEANS FOR YOU…

Well, it depends. 

On the most basic level, this means that in order to become the new owner of this home, you will have to complete a successful negotiation with the owner (s) of the mortgage note to purchase the home to allow the ownership to be transferred to you for less than the current owner owes. 

This adds several  additional steps and required signatures to the offer acceptance process which will now include:  the home owner who signed the listing agreement, the lender (s) and in some cases third party investors.

FOR STARTERS…

But for starters, it means that you should be prepared to be very patient and persistent if you truly want this home.  Short Sales are arguably among the most difficult negotiations to complete.  It is not unusual for real estate agents to negotiate for months to bring these transactions to closure. 

Being prepared for the long haul will save you angst of increased blood pressure, stress and unnecessary temper tantrums. It will also be deeply appreciated by your real estate agent who will probably accure more stress than a commission will adequately compensate for.

BASIC STEPS…

Buying a home which requires the negotiation of a Short Sale will also add some additionaldon't stress steps to the home purchasing process.  Be prepared to wait while the bank (s) reviews the home owners paperwork to determine if they will qualify the potential Home Seller and home in question for a Short Sale.  You can also anticipate that a Broker Price Opinion aka Appraisal may be ordered to determine if the bank wants to entertain your offer as one reflective of the current market conditions.

Offer submissions for Short Sales may languish on an Asset Managers desk while they sift through hundreds of files which have landed there before yours or wait to see if a better competing offer comes through.  Be persistent.  If you’ve done your homework and received professional consultation from your real estate expert, you should be aware of the Value of your purchase.  A Short Sale negotiation done correctly can earn you your dream home with a significant amount of equity attached…no small feat in today’s market.

HIRE A PROFESSIONAL…

Short Sale negotiations are often complex transactions.  It's important to understand what is being negotiated and the implications for your credit.  There is a difference between being given the 'go ahead' to retail your property and being absolved of the obligation to pay back your note.  In Michigan, a deficiency judgement can require re-payment on a loan years later. We advise you to obtain additional professional counsel which may include your tax advisor and/or attorney to determine what the best route is for your specific situation.

Although it’s not possible to cover the complexities of the Short Sale process in this short post, you might find the links below helpful as a home buyer or home seller in the Greater Grand Rapids, MI area.  You can also contact us at info@auduhomesto discuss the particular details of your situation.  We specialize in advising clients on strategies to buy and sell property in a challenging market.

*This blog post was orginally published in 2008. It has been updated to reflect the marketplace considerations today.

 

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Ambassador
1,877,460
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Lola, what a great tutorial on the basics of doing short sales especially for your area where they are so prevalent. Clear, concise explanation with both the pros and cons.

Jul 11, 2011 02:30 PM #1
Rainmaker
239,173
Vickie Slade
Colorado Landmark, Realtors - Boulder, CO
Service You Can Trust ~ Someone You Can Depend On

Lola, I agree with Gary, this is a great post about short sales and what a buyer should expect.  Short sales do require a lot of patience and they do require working with a professional.  We have a lot of short sales in our area as well.  It's becoming such a norm these days (unfortunately).

Jul 11, 2011 03:35 PM #2
Rainmaker
414,502
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Great blog Lola.

So often buyers aren't educated about what buying a short sale is all about.  It is not like a traditional sale and it is more difficult to buy.

Jul 12, 2011 12:22 AM #3
Rainmaker
1,509,545
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

Great summary. Short sales can indeed turn into one of the longest real estate transactions - ever! BTW, really nice new picture in your profile!

Jul 12, 2011 12:44 AM #4
Rainer
375,411
Keith Lawrence
RE/MAX Properties - Mahwah, NJ
ABR, CDPE, SFR, 203K Specialist

Great post.

I had an agent yesterday with a client that wants to put an offer in on one of my short sale listing. They wanted it quick. I had to explain to the agent that their buyer may not want to go the short sale route since the timing is all up to the bank.

It is important to educate all parties that are involved in a short sale of the process.

Jul 12, 2011 12:50 AM #5
Rainmaker
1,369,777
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Lola, good information for a novice buyer who wants to pursue a short sale. Education is key what looking at a short sale.

Jul 12, 2011 01:10 AM #6
Rainer
139,896
Ben Benita
Ben Benita - Gainesville, VA
Speaker, Author, Game Changer, Coach

Great post, and, with short sales, ALWAYS set expectations in the beginning, as you seem to have done.

Also to any clients out there, MAKE SURE YOU WORK WITH A PROFESSIONAL....you don't want to be one of the "first" short sale clients for anyone.....doing so WILL often result in a 6 to 12 month long short sale.

Jul 12, 2011 01:14 AM #7
Rainmaker
318,971
Tamara Inzunza
RE/MAX Executives - Alexandria, VA
Close-In Alexandria and Arlington Living

Patience is crucial when buying a short sale. If you know you need to be in a house quickly, then short sales are not the way to go. Working with an experienced agent is a must.

Jul 12, 2011 02:05 AM #8
Rainmaker
732,603
Eileen Hsu
Douglas Elliman Real Estate - Manhattan, NY
LICENSED REAL ESTATE SALESPERSON

A very thorough tutorial that is going to educate any first time buyer to your area.  Buying a short sale is not going to be a traditional sale and understanding some of the process as a first time buyer is very important.

Jul 12, 2011 02:44 AM #9
Rainmaker
622,210
Morgan Evans
Douglas Elliman Real Estate - Manhattan, NY
LICENSED REAL ESTATE SALESPERSON

If I was a brand new buyer I would really appreciate a blog like this that gives me a heads up on what the short sale purchase process is going to look like.

Jul 12, 2011 05:33 AM #10
Ambassador
1,090,376
Celeste "SALLY" Cheeseman
Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

Love the abc's and 1,2 3's....not many know the ins and outs of short sales and only look at it like a 'deal' and don't realize. Good educational material for the first time short sale buyer/seller.

Jul 12, 2011 06:03 AM #11
Rainmaker
387,816
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Thank you for your comments and feedback.  I find that most people are overwhelmed by what the process of a Short Sale requires.  Every bit of information to shed light on the issue and take away the fear of the unknown makes a big difference.  Feel free to share any tips that you have also found useful for working with clients going through the process in your areas of the country if you're an agent.

Jul 12, 2011 06:14 AM #12
Rainmaker
660,406
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Lola,

 

Very well written and informative. Where is the reblog button when I need it? You tutorial would be good information for short sale sellers and buyers in Fremont, Ca. and many other places.

Jul 12, 2011 08:05 AM #13
Ambassador
2,079,469
Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

Lola - Indeed, a well written blog on what a short sale is - so many have NO CLUE! It seems a week doesn't go by without my having to explain the entire process a couple of times at least!

Jul 12, 2011 09:20 AM #14
Ambassador
2,007,427
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Lola - This is a great "short" tutorial on the realities of buying a short sale.

Jul 12, 2011 03:08 PM #15
Rainmaker
185,585
Irina Netchaev
Pasadena Views Real Estate Team, Inc. - Pasadena, CA
Pasadena CA Real Estate

Nicely said!  Always important to set expectations.  There's a lot to understand in regards to short sales and this post is very comprehensive!  Great job!

Jul 17, 2011 07:38 PM #16
Rainmaker
472,195
Janice Roosevelt
Keller Williams Brandywine Valley - West Chester, PA
OICP ABR, ePRO,Ecobroker

Loa, very succinct. Buyers need to be educated with well -researched and laid information like this when considering a short sale.

Jul 18, 2011 09:06 AM #17
Rainmaker
507,811
Robert L. Brown
www.mrbrownsellsgr.com - Grand Rapids, MI
Grand Rapids Real Estate Bellabay Realty, West Mic

The time factor. If they could reduce the time by 75% more people would see a short sale as a viable option to purchase.

Jul 23, 2011 12:22 PM #18
Rainer
28,364
Anthony Mosley
Van Dyk Mortgage Corporation - Grand Rapids, MI

Great article Lola! Patients is defiantly a virtue in the short sale market. I also believe that the right agent is going to make a tremendous difference in the process. Thank you for the blog!

Jul 26, 2011 04:18 AM #19
Rainmaker
4,432,093
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

These are great tips for buyers considerng a short sale as well as for agents. Many people do not know how the short sale process works.

Apr 27, 2012 11:04 PM #22
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Rainmaker
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Lola Audu

Audu Real Estate~Grand Rapids, MI ~Welcome Home!
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