Are you sure you want to be a short sale Buyer?

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As obtained from "REO"          *Buyer's Specialist*         Terry Ervig 425 870-9452                    

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Did you happen to watch the Today Show today?  If not; check out this video link  from the Today Show covering the heartbreaks and hassels of short sales.

After watching this video one might ask themselves if it is worth it to wait eight months to move into their dream home? What address do you give the schools when getting ready to enroll your children?

Note that this segment is about 18 months old.  The process takes much longer now, as a given offer processor may have from 350 to 500 offers on their desk at a given time.

The Today Show mentioned that only 40% of short sales close in the state of California. In the Pacific Northwest we have noticed only 30% of short sales closing. There are two reasons for this issue; first buyers get impatient and just walk away and second the package to the lender may not be presented properly by the listing agent due to lack of experience with the short sale process.

To qualify a short sale; as a buyer, you want to try to work with a realtor who is familar with the short sale process and time lines. Currently the short sale market is a moving target; there are too many files and not enough staff to handle most of them and the lender requirements and procedures in-house are constantly changing as they try to use what works and become more efficient at dealing with their case loads.

Questions you will want to ask the listing agent for a short sale in order to qualify the home as being a home you want to invest your time:

1)  Ask who is the lender? Is there a second and third lien holder? If there is a 3rd, you might reconsider.

2)  Ask if they have ever done a short sale?

3)  Ask if they have ever sold a short sale, who was the lender on that deal and how long did it take?

4)  Is there a Notice of Trustees Sale?

5)  Who is doing the negotiating? If it is a 3rd party, make sure they are reputable.

6)  What is your plan of action and how are you going to move forward?

7)  What is your strategy for submitting offers to the lender?

The last question is really important when realizing that a lender is likely to have a stack of 250-350 files on their desk at any given time. It is likely they are sitting 500 miles away from the subject property and will look at an offer as just a number. Therefore, you will want to submit the highest and best offer.

For agents, you may consider; even if you have a pre-approved buyer; to make sure there is proof of funds for the downpayment and also consider getting a desktop underwriting approval. This software will tell you up to what interest rate the buyer will still qualify for, should loan rates rise while waiting for a short sale to close. Don’t forget to pull title updates along the way to make sure there are no liens being attached to the property while waiting to close.

As a buyer who wants to get into the short sale arena, you can get a good deal. However, I would recommend that you keep your eye on the prize (keep your goals in the forefront), make fair and educated offers, don’t get attached to any given home and work with an agent and lender that are knowlegable on the subject.