As a short sale listing agent, it is important for me to try to educate the buyers as much as possible on exactly what it means to get involved in this type of transaction.
First of all, let me tell you that "short sale" is kind of an oxymoron. A short sale usually takes a longer escrow period. I say usually although there is the fluke transaction that gets through in 30 days. A short sale is when the seller is selling the house for less than what he owes on the sale and so the bank is a third party to the transaction. This is where the time amount of time in the escrow comes in. When an offer is presented to the bank it is presented along with the "work out" package from the seller. This includes all of their financial information, the reason for their financial hardship (the seller must have a viable hardship for the sale to go through and making a bad financial decision is not considered a hardship), a copy of the listing agreement, the HUD1 which basically is the net sheet of how much the bank is losing. When all of these items are presented to the bank, the loss mitigation department turns the package over to an assigned negotiator. This is the listing agents contact at the bank. It can take up to two weeks to be assigned a negotiator.
Then the bank has to take a look at the offer and a BPO (Broker Price Opinion) is ordered. This is basically a market analysis done by a third party Realtor. The bank then will present a counter offer and may demand to close within X amount of days. I've heard from an escrow officer recently that one bank demanded to close in FIVE days. Buyers, be aware, you need to be READY to close even though you've been waiting for a month, you need to be ready. This translates into this: GET Your Loan Locked and Ready!! This is super important!! If you've been waiting for a response back from the bank and then can't perform, you've wasted a lot of time for nothing.
Basically I can tell you this if you are purchasing a short sale. You need patience. And trust that the listing agent is doing their job. It IS your perogative to pull out of the escrow if you feel that the listing agent isn't doing their job. Doing their job means hammering the negotiator on the phone until an answer is given. Of course the squeaky wheel rule applies to this equation. And I have to tell you that I read here that one bank alone has seen an increase of 150 to 300 short sale applications PER DAY! since October. That number is expected to rise to 500 per day by summer. Poor banks. I can't imagine being in the loss mitigation department. That job has got to be worse than air traffic control. Believe me, I will do everything in my power to get a strong offer through.
There are a lot of specific case scenarios I may be leaving out, so please call me to discuss your questions so that I can answer them in an educated manner. There are definitely advantages of purchasing a short sale. You can get a great deal and the banks are definitely saving money rather than letting the home go into foreclosure. Absolutely I recommend you consider purchasing a short sale, but it is important to educate yourself so you know what you are walking into.
Thanks for stopping by!! Susan Manning 951-551-7790
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