Short Sale Issues

As the market continues to swing in the direction of more and more people defaulting on their mortgages there are issues that are being encountered with the buying and selling of short sales.  This blog is devoted to addressing those issues and hopefully making the process easier for agents doing short sales or helping buyers buy short sales.

Title issues:  previous liens continue to be an issue.  If you are thinking of selling a home that is going to be a short sale I highly recommend doing a preliminary title search to turn up any and all liens at the time you list the property.  If you are unsure how to get a lien released I would suggest seeking professional help.  I use the company MH Solutions, Inc. out of Falmouth.  This company has been in existence for 2+ years and I utilitize their services with all of my short sale listings.  I don't have the time to chase these liens down nor do I wish to work with the banks directly.  That is not my forte so I always utiltize their services when helping clients do a short sale to sell their property.  Their fees are extremely reasonable and more than worth the money to have so many successful short sales happening at one time.  (We average a success ratio of 7 out of 10 closings.)  Strike up a connection with your favorite Title Company (mine is Bay Area Title in Portland) and pay the extra money to do these title searches ahead of time.  It will save you a lot of time and money.

Building inspection surprises: It is well worth the money to find a connection with a terrific building inspector that can "pre-inspect" the property ahead of time so you can disclose all issues and therefore truly have it be an "as is" sale where there is no going back to the bank to ask for more money off after the initial offer.  Going back to the bank for more off will in all likelihood result in a lengthy (months!) delay of the final bank approval.  Many building inspectors are willing to do these preliminary inspections for a variety of pay structures - some will wait for close, some will do the inspections and accept payment from the future buyer, many will discount if they know this is going to be an ongoing relationship between you and them.

Sellers unknowingly submit loan modification packages at the same time:  It is imperative that you are clear with your Seller that should they change their minds about doing a short sale that they let you know at anytime.  I had a short sale go bad because at the last minute the loan modification department talked to the short sale department and everything came to a screeching halt while the Sellers tried to decide which way they were going to go. 

There are but three of the issues I have encountered.  I will be blogging more regarding these topics and would welcome and thoughts/questions on this topic.