Recently many of my clients have asked me if they should consider short sales in their home search in 2012. My quick answer is yes but be ready to wait. I like to call it patience equity because they obviously take longer but they enable the buyer to have instant equity in the home due to being sold below market value.
When I first started working on short sales in 2007, the response time from banks was much worse and in many cases the banks would simply reject an offer with no real counter. The other issue was that there was no real structure in place at the banks to handle the sudden flood of short sales that seemingly appeared over night. My team and I have negotiated over 30 short sales since 2007 and the biggest change I've seen is that banks now have a set procedure for handling them. Some banks are better than others but a good negotiator can make all the difference. Another advantage for sellers is legislation that enables their debt to be forgiven on their primary residence and reduced tax liability.
Before I present an offer on a short sale, from one of my buyers, I ask these 3 questions:
1. Who is the primary lien holder
2. How Many liens are on the property
3. Has the bank approved the sale price? and if not where are you in the negotiation process.
Some banks move faster than others when it comes to responding to a short sale offer, so it is important to know who the primary lien holder is. The number of liens on the property also plays its part in relation to the time it will take to close because the negotiator will have to negotiate with all of the lenders. Two liens on a property is acceptable but three may prove to be very difficult to overcome. Lastly, if the bank has approved the short sale list price, then it will obviously move much faster. If not, its really a waiting game.
Another question that I am frequently asked on my short sale listings is if there is an attorney involved in the negotiations. This is a good question as well but an attorney doesn't necessarily ensure that the short sale will be approved any sooner. A good short sale negotiator can be just efficient as a Short Sale Attorney. I have worked with some attorneys that are very good and others that have simply dropped the ball. So while an attorney may help they are not essential in getting a short sale approved.
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