Are Short Sales a Thing of the past?
A wonderful family I have worked with for months will finally close on a short sale this week, but many wonder if short sales are a thing of the past. We put our offer in on the property the end of October and we are just under 90 days to close.
Writing an offer on a short sale is not for the faint of heart. There are many unknowns, ie will the bank approve the short sale? Will the seller agree to any of the terms the bank may require approving the short sale? Will the house be in the same condition if a seller is selling due to a short sale, not necessarily because they want to move to a better home?
For my buyers, it was an opportunity to get the bigger home they wanted, in the neighborhood they wanted without changing their children's schools. Yes, we sold their home and they moved into an apartment (2 adults, 2 children, 2 cats) for a few months, but their eye was on the prize!
The house they are buying is a bit dated (can you say mauve carpets?) and in need of bathroom and flooring updates. To the rescue..... a Fannie Mae Renovation loan. This loan allows a buyer to buy a home, then complete preapproved renovations with the funds for the renovation added to the loan. While not for the faint of heart, this will allow my buyers to get the house THEY want with the updating THEY want.
This loan did require my sellers to get contractors to provide estimates for the updates they wanted for their new home to be sure these were qualified renovation items. The appraisal had to identify the value of the home after the renovation was completed. Both requirements were met and the desired renovations were factored into the purchase price and confirmed the appropriate value for the property. This process also required a lender familiar with the Fannie Mae renovation program.
As Realtors we want our clients to get the best home at the best price. The Fannie Renovation loan answered the question of how to afford the updates my buyers wanted, with the house in the desired location. While it has been a long three months, with a bit more stress than my buyers would like, they see the light at the end of the tunnel.
At the end of the day, most of us would like a 30 - 45 day close to getting a paycheck. Short sales are a lot of work with no guarantees......but the knowledge my buyers will have the home of their dream makes fills me with much happiness!
Yes, there were challenges along the way, ie rate lock expirations, emotional seller leaving her dream home after the death of husband, unexpected 2nd loan coming to light, and an HOA assessment coming to light. Yes, short sales can be a challenge, but when buyers are informed about the process and potential outcomes, this may be the answer for some buyers. We see much fewer distressed properties in the Phoenix metro area today, but they are out there and may be just what your buyer needs!