S.S.S. (Short Sales Skinny) A new challenge for home buyers in Macomb County MI

By
Real Estate Agent with Keller Williams Realty - Lakeside Market Center

Have patienceDisclaimer 1: I don't market homes that are in a short sale position. Why not? I don't have the expertise and feel strongly that anyone who works with sellers in this situation should know what the heck they are doing!

Disclaimer 2: I haven't had a buyer make an offer on a short sale. Why not? All of the home buyers I've worked with this year have had time frames that needed to be met to be in to their new homes.

After reading much about short sales, and listening to real experiences being told by the agents who are working with these sales I have learned enough to know the following and pass along the S.S.S. to you:



A home owner
puts his home on the market for less than what they owe on their mortgage (or 2 mortgages, or 3 mortgages.)

The sellers real estate agent and the seller then put together a package for the lender (and 2nd lender, and third lender if applicable) to explain the hardship that the seller is facing, the falling property values in the area and the seller also sends along all of their financial information. (Think of this as the documentation for applying for a mortgage, but with reverse intentions)

A home buyer hears about the house for sale that is priced attractively and makes an appointment with his buyers agent to view the home. Home buyer then decides to make an offer on the home. Seller accepts the offer and the purchase agreement is forwarded over to the lender (and 2nd lender, and 3rd lender, if applicable)

Home buyer and the buyers agent wait. The first week goes by and everyone is still patient because of course they've been told to expect this wait. The 2nd week goes by and still everyone is displaying patience. On to week 3 and the buyers agent has been calling the sellers agent asking if there is any news, and has the package(s) that has been submitted to the lender(s) been reviewed? The sellers agent states "Have patience". Week 4 comes around and perhaps the package has been reviewed by someone with authority to do so at the first lender. (I'll stop mentioning lender #2 and #3. You get the idea by now.)

Weeks 5-8 the lender orders a BPO. (Brokers price opinion, meaning that the lender, normally in another state, wants to make darn sure that the house is really worth what the seller, the sellers agent, the buyer and the buyers agent in this local area feel it is worth.)

The lender(s) decides one of two things: That the house is worth what the purchase offer indicates, or that the house is worth more than what is being offered for the home.

Guess what happens if they decide it is worth more? Google "short sales" and you'll have so much to read that your eyes will hurt.

Did I forget to mention the fact that some of these transactions don't allow seller paid concessions to the buyer? Did I also forget to mention that while the buyer is waiting for a response that the interest rate they were quoted upon mortgage application has probably now expired?

Purchasing a short sale can be a good thing for the patient buyer and the seller. Always ask upfront what the expected time table is, and be aware of the challenges and changes that can take place during the process.

Go in to the process with your eyes wide open. Ask your agent for their experience with them, and seriously consider a long sit-down with your agent to discuss your purchase options in this ever changing real estate market.


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Rainmaker
130,249
Rich Ferretti
Rich Ferretti Real Estate - Charlotte, NC
ABR QSC Realtor/Broker, Charlotte NC Real Estate a

Kris,Great post. I have gone thru 3 of these situaltions, representing the buyer and all 3 times the my buyers didn't want to wait anymore.

Rich

Jul 21, 2008 10:36 PM #1
Rainer
340,913
Kris Wales
Keller Williams Realty - Lakeside Market Center - Macomb, MI
Real Estate Blog & Homes for Sale search site, Macomb County MI

Rich:  I'm curious as to how these short sales are going in other parts of our country.  Thank you for your input!

Jul 21, 2008 10:53 PM #2
Ambassador
553,625
Larry Story
Total Care Realty - Greensboro, NC
Total Care Realty, LLC, Greensboro, NC Real Estate

Kris,

The worst ones are the ones with multiple banks.  That is one reason it takes so long.  The more hands in the mix the longer it takes.

Jul 21, 2008 10:55 PM #3
Rainer
22,394
Cape Coral Florida Golf Course and Waterfront Homes
Gulf Coast Realty Network, Inc. - Cape Coral, FL

Good analysis, Kris.  The whole deal rests upon the bank.  I have some banks that are very easy to work with.  Even some branches of Countrywide are relatively easy to work with.  Then again.....
The whole trick, I think is to convince the bank of the current market value, because that is the key number that goes into the equation.  A mistake that some agents seem to make is to overwhelm the asset manager with details.  A package 3 inches thick can be much less effective than a few pages concisely written and briefly detailed.
And one of the most damaging things comes right out of OUR closet....BPOs.  Many BPOs are done by hungry rookies who need the $50. for food.  Sometimes not done with great skill or......  So if the BPO is bupkis, your whole deal fails and you never know why.

Jul 21, 2008 10:57 PM #4
Rainer
340,913
Kris Wales
Keller Williams Realty - Lakeside Market Center - Macomb, MI
Real Estate Blog & Homes for Sale search site, Macomb County MI

Larry:  That's what I've been hearing also.  I can't even begin to imagine what it must be like to try and get responses from more than 1 lender, and have the 2nd or 3rd agree.

Jim:  Thanks for your input.  You're echoing what I'm hearing about here in Michigan.  It surely sounds like the challenges are the same for you in Cape Coral Florida. (Especially with the BPO's)


Jul 21, 2008 11:16 PM #5
Rainmaker
281,679
Mike Mitchell
Real Living Kee Realty - Saint Clair Shores, MI
REALTOR (R)

Kris, I just had a home inspection today for some buyer clients who purchased a short sale, the listing agent said expect 10 to 14 days for a response, we got a counter in less than 7 days, so far it's going very smoothly. I did have one a couple of months ago, with different clients, that we didn't end up getting that was like you described, waited for an answer for what seemed like forever.

Oh and I won't list short sales either, not my niche.

Jul 22, 2008 01:18 PM #6
Rainmaker
1,523,673
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

I ahve worked both sides of the s/s transaction as well as performed BPOs. Good job summarizing the process!

Jul 27, 2008 11:36 PM #7
Rainer
340,913
Kris Wales
Keller Williams Realty - Lakeside Market Center - Macomb, MI
Real Estate Blog & Homes for Sale search site, Macomb County MI

Mike:  I bet the listing agent had a nice packet already submitted before putting it on the market.  Good work, and I hope things continue to go as smoothly for you and your buyer clients.  The latter deal you described is what I'm hearing too much of sadly.

Gary:  Thank you.  I tell ya, it makes me wonder who the short sales benefit?

Jul 27, 2008 11:59 PM #8
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Rainer
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Kris Wales

Real Estate Blog & Homes for Sale search site, Macomb County MI
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