Buying Short Sales in Destin Florida

By
Real Estate Broker/Owner with Rulnick Realty, Inc.

 

Buying a Destin Short Sale?  What is the Process?

  1. When you write your offer for a Short Sale, your agent should insert language into the contract that states the contract is "Contingent on seller's mortgage holders' approval".
  2. Often, lenders require Short Sale properties to be sold in "as is" condition, thus not threaten a potential closing with repair items.  Language should  be inserted into the offer in that regard, either with appropriate addendum, or under additional terms.
  3. The Seller may counter your offer.  Remember, the contract is between you and the Seller, not you and the Seller's lender.  The Seller does not want to submit an offer to the bank knowing it will likely be rejected and/or counter-offered because it is too low or has too many closing costs on the Seller's side.  The lender pays these costs, and will always analyze its "net".  In this case, it will be a "loss", so the lender wants to mitigate the loss as much as possible.
  4. After the contract is signed and agreed to by both you and the Seller, it will be sent to the Seller's lender, or lenders if there is more than one mortgage holder.  Documentation submitted with the contract includes an estimated net sheet, the Buyer's approval or proof of funds letter, the listing agreement, Seller's financial worksheet, recent paystub, recent bank statement, last year's tax returns and hardship letter.
  5. The Seller's lender will then order an independent appraisal and/or Broker Price Opinion (BPO) of the subject property.  Why?  They are already losing money on their investment with the seller, i.e. the full mortgage amount that was agreed to is not being paid back.  Therefore, their investors are not making what was promised.  They want to make sure the offer is in line with market value, and not too low. They have a responsibility to their investors, and in the case of VA or FHA loans, they have federal guidelines that must be met in terms of value.
  6. The Seller' lender may counteroffer your offer with the appraised value if your offer was too low.  In other cases, your offer may be rejected if it is even too low for an appraisal in the estimation of the short sale lender's internal valuation system.
  7. You will accept or counteroffer this amount.  Your offer may ultimately be rejected if it does not net a certain percent of the appraised value, including closing costs.  This varies by lender.  The lender makes it decision based on the requirements of the end-investor on the mortgage regarding price.  For example, even though the "lender" may be Wells Fargo, the actual investor reaping interest may be the Bank of New York or Merrill Lynch.  There may also be PMI or private mortgage insurance on the loan.  In that case, the PMI company will also order a separate appraisal or BPO.  Your offer must satisfy both lender's requirements.  If there is a second mortgage on the property, the first mortgage holder will offer the second mortgage holder a dollar amount as a "buy out".  I help facilitate these negotiations.  Additionally, the lender(s) may ask the Seller for a cash contribution or promissory note.  If the Seller cannot comply, you may be asked for additional monies to make up some of the difference.  If the property is a good deal, you may wish to do so.
  8. The timeline for initial counteroffer or final approval from the lender may be 2 to 4 months.  This is because lenders have an overwhelming number of sellers asking for Short Sales.  Some of the bank "negotiators" have as many as 400 files at one time.  They often work on the files facing imminent foreclosure sale dates first.  Rest assured, I contact these lenders every two business days by phone and/or email to get updates on the offer.
  9. After final approval by the lender, a "demand" or "approval" letter is sent out to the Seller.  The letter will normally stipulate that closing must occur by the date stated in the contract, or there will be a per diem penalty for not closing on time.  Thus, you are expected to have your mortgage, insurance and inspections completed in a timely manner. The per diem penalty is quite common in the corporate world.
  10. The lender will expect to see a copy of the settlement statement at least two days prior to closing to ensure it is accurate, and matches what was stated in the net sheet that was submitted with the offer and on the approval letter.
  11. Congratulations! Your patience has been rewarded.  You got a great deal!

It's Wendy!It's Wendy!

Wendy Rulnick, Broker, CRP, CRS, GRI, ABR     Rulnick Realty, Inc.

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Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204

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Call Wendy Rulnick, Destin real estate agent, to list and sell your home or condo or help you buy a home or rental property on the Emerald Coast of Florida in Walton, Okaloosa and Santa Rosa County-  Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Crestview, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field.   Wendy is a short sale and pre-foreclosure specialist and can help you sell or buy a short sale property in and around Destin Florida and the Emerald Coast.

All Rights Reserved. *Buying Short Sales in Destin Florida* Contact Wendy Rulnick regarding Destin Florida real estate and vicinity. Copyright © 2009 by Wendy Rulnick.

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"It's Wendy... It's Sold!"

Wendy Rulnick, Broker/Owner Rulnick Realty, Inc.

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Wendy Rulnick is the marketing choice for sellers on the Emerald Coast who want to list and get their homes and condos sold in Destin, Sandestin, Bluewater Bay, Santa Rosa Beach, 30-A, Watercolor, Seaside, Rosemary Beach, Seacrest Beach, Kelly Plantation, Regatta Bay, Destiny and more.

Rulnick Realty

 

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Show All Comments
Rainer
9,033
Jason Grams
none - Roseville, CA
You made a very good point in this post.  Getting the email address....most of the time the negotiators at the bank have a full voicemail box and they rarely answer the phone live, so having an email address to get updates is crucial when dealing with them.  I do the same thing, call every couple days, leave a message and send an email!
Feb 17, 2008 04:17 AM #1
Rainmaker
467,186
Sandy Nelson
Riley Jackson Real Estate Inc. - Olympia, WA
your Olympia area Realtor

Wendy,

This is excellent advice.

Sandy

Feb 17, 2008 04:26 AM #2
Rainmaker
360,366
Lynn Pineda
Keller Williams Realty - Coral Springs, FL
Coral Springs REALTOR- Promises Delivered
Wendy, it's important for buyers to know what to expect.  I feel that it will be a lot more tolerable for them if they know up front.  It's when they get a lot of suprises along the way that can bust their patience load.
Feb 17, 2008 08:03 AM #3
Rainmaker
496,864
Wendy Rulnick
Rulnick Realty, Inc. - Destin, FL
"It's Wendy... It's Sold!"

Jason, Thank you!  We've got to try to get those negotiators from all angles!

Sandy, Thank you for the compliment.  I appreciate it!

Lynn, I agree, buyers need to know worst case scenario upfront.  Thank you for commenting!

Feb 17, 2008 08:35 AM #4
Rainmaker
123,248
Chrysti Tovani
eXp Realty, LLC. - Sacramento, CA
Sacramento Real Estate Agent
Thank you!  I'm on AR right now looking up all the info I can get to arm myself for what we are going to go through while I'm helping my client put and offer to purchase one of these "short sale" properties. 
Feb 18, 2008 06:34 PM #5
Rainmaker
496,864
Wendy Rulnick
Rulnick Realty, Inc. - Destin, FL
"It's Wendy... It's Sold!"
Chrystina, You can do it! Good luck!  Wendy
Feb 19, 2008 01:10 AM #6
Rainer
26,620
Susie Genet
Chinowth & Cohen Realtors - Tulsa, OK
Wendy, this is definitely useful information for those interested in buying short sales.  I have listed several of them and received many offers from agents who do not understand the process and write offers that are hard to work with.
Feb 21, 2008 12:01 AM #7
Rainmaker
496,864
Wendy Rulnick
Rulnick Realty, Inc. - Destin, FL
"It's Wendy... It's Sold!"
Susie,  Thank you, glad this information is useful to you! It is better for buyers and other agents to know up front and be prepared.
Feb 21, 2008 02:15 AM #8
Rainmaker
177,851
Stella Barbour
NoVa Brokers LLC - Vienna, VA
Principal Broker, Serving Virginia and Maryland
This was a very good post.  Very exact to the point.  Patience is everything with short sales.
Feb 21, 2008 11:57 AM #9
Rainmaker
43,295
Cari Hendricks
RE/MAX Gold - Midtown - Sacramento, CA
Broker Associate
Wendy- Just discovered your blog, read the whole thing and subscribed. You have shared a lot of great information on short sales. Thanks so much for the insight, experience and "inside information". Awesome!
Feb 22, 2008 07:57 AM #10
Rainmaker
496,864
Wendy Rulnick
Rulnick Realty, Inc. - Destin, FL
"It's Wendy... It's Sold!"

Stella,  Thank you.  I appreciate you appreciating my style!

Cari, I am so glad to be of help! Thank you for subscribing.  And "you are welcome"!

Wendy

Feb 22, 2008 08:43 AM #11
Rainmaker
612,698
Sharon Simms
Coastal Properties Group International - Christie's International - Saint Petersburg, FL
St. Petersburg FL - CRS CIPS CLHMS RSPS
Wendy - thanks for the information. Many buyers can't/won't wait for three months just to see if their offer is accepted - particularly when many sellers/seller's agents/lenders will continue to accept other offers during that entire time.
Mar 14, 2008 11:55 AM #12
Rainmaker
496,864
Wendy Rulnick
Rulnick Realty, Inc. - Destin, FL
"It's Wendy... It's Sold!"
Sharon,  Yes, the short sale buyer has to be carefully qualified, as does the listing agent.  The short sale buyer should know in advance that he will be counter-offered, that he may not get the property, and that the wait can be four months before closing!  The listing agent should be qualified in that she is handling the short sale process fairly.  By the way, I am *honored* that you, the famous one, have commented on my blog!  Wendy
Mar 15, 2008 04:01 AM #13
Rainmaker
612,698
Sharon Simms
Coastal Properties Group International - Christie's International - Saint Petersburg, FL
St. Petersburg FL - CRS CIPS CLHMS RSPS

Wendy - I don't know that I'm famous, I've just been blogging here a long time. In any case, it's nice to now know someone in Destin.

Mar 15, 2008 10:33 AM #14
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