Short Sale Confusion

By
Real Estate Agent with Keller Williams Cornerstone Realty

                                                  SHORT SALE CONFUSION IS ON GOING

We are being overwhelmed with the media talking about "short sales" and bank foreclosures and yet there is a big difference between the two transactions.  People tend to think that you will get the "best deal" if you can buy one of these properties. "Short sale" properties are any thing but a short sale!  You have to be very patient and understand that the listed price is not what the bank has agreed to accept for this property as there is a deficiency between the mortgage owed and the sales price.  Thus creating the short sale----the sales price is not enough to pay off the mortgage and the bank is short on the payoff and has to decide on what they are willing to loose.

Traditionally, listing agents place these properties on the market at any price they decide on, usually less than the going price for the comparable property.  Then a buyer comes along and decides to make a "low ball" offer. Then the buyer cannot understand why the bank counteroffers, many times six weeks or three months later with a higher price than the listed price.  This is because the bank rarely gives a seller or Realtor a price on the property until there is an offer.  Not a very intelligent path of pricing but yet the banks have chosen to do this.

We have a few situations where the banks are getting their acts together and are now having a current appraisal done to assist the Realtor with marketing this property at an acceptable price. This is now called the "preapproved by the bank short sale."

The main requirement for a bank to entertain a "short sale" is that the mortgagor must be suffering from some type of hardship such as loss of employment or extended illness.

The main difference between the "short sale" and a foreclosure or bank owned property is a "short sale" property is still owned by the seller.  A foreclosed or bank owned property has completed through the legal process of foreclosure and is owned by the bank and the bank can make all the decisions regarding the sale of the property.

Most important, when purchasing a "short sale" or foreclosed property, insist on a title insurance policy from a reputable title insurance company.  This guarantees that the title that you are receiving for this property is free and clear of prior liens including any tax liens on the property.

In conclusion, look for foreclosed properties in order to avoid any challenges.  These are ready to be purchased.  The "short sale" can tie you up and cost you more in the end.

 

Crystal McCall, Keller Williams Cornerstone Realty

Realtor, CRS, CRB, ABR, CIPS, e-Pro, Cyberstar

Crystal@CrystalMcCall.com

http://www.CrystalMcCall.com

Comments (6)

Richard Dolbeare, R(B)
eXp Realty - Wailuku, HI
R(B), ABR, CRS...Hawaii Multi-Island Specialist

Hi Crystal,

Thank you for confirming what I had concluded myself and that is that a short sale list price doesn't mean much.  I've seen such rediculuous list prices that it's extremely doubtful a lender would accept it.  I hope we see more of the Pre-approved types.

Aloha

Jan 09, 2009 06:22 AM
Mick Michaud
Distinctly Texas Lifestyle Properties, LLC Office:682/498-3107 - Granbury, TX
Your Texas Lifestyle is Here!

Or go the investor route and try to buy the underlying note! 

Jan 09, 2009 06:47 AM
Gene Allen
Fathom Realty - Cary, NC
Realty Consultant for Cary Real Estate

Once again it only goes to prove there is no order in the world of real estate.

Jan 09, 2009 07:28 AM
Anonymous
Richard Dolbeare

This is all that buyers are requesting today and it is a lot of work with out a pay check at the end..

 

Blessings to you,

Crystal McCall

Jan 09, 2009 11:27 PM
#4
Crystal McCall
Keller Williams Cornerstone Realty - Ocala, FL
CDPE,CIAS,ABR,CRS,CRB,GRI,CIPS

Everyday the ongiong task is to educate sellers and buyers about the depth of working on a short sale transaction.  Ala in all, if someone does not pay there mortgage in a timely manner, it effects your credit rating whether it is a short sale or a foreclosure.

Jan 17, 2009 11:10 PM
Chris & Karen Highland
eXp Realty - Frederick, MD
Integrity, Experience, Enthusiasm!

If you want to work with short sales, either buyers or sellers, I recommend a CDPE certification. It was the best thing we ever did.  In Maryland, 4% of short sales ever make it to settlement.  The stats for agents with CDPE certifications is 77% make it to closing...because they are trained and know what they are doing.

Jan 18, 2009 10:30 AM