Are you a buyer looking to purchase a short sale


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Are you a buyer looking to purchase a short sale

  1. 1. Are You a Buyer Looking to Purchase a Short Sale? Blog What is KCM? Our Mission Contact Us Are You a Buyer Looking to Purchase a Short Sale? by Brandon Brittingham on May 8, 2012 · 7 comments Tweet 256 Share 1016 Share 139 151 of 8 6/26/2012 11:04 AM
  2. 2. Are You a Buyer Looking to Purchase a Short Sale? It seems that there is a significant amount of confusion when it comes to purchasing a short sale. There are many misconceptions when it comes to this type of transaction, so below I have provided some information to potential buyers of short sales. If you are looking to purchase a short sale, understand that it is not the same as a normal sale and the approach is very different. There could be several parties involved and issues that are unknown to the buyer and buyer’s agent that can affect the transaction. If you are looking to purchase a short sale here is some helpful information. 1. On average, to get a short sale approval, it can take 60-90 days. There could be mortgage insurance and an end investor on the loan as well as the servicer, which means it has to go through three different processes. Bank of America could be the servicer on the loan but they do not actually own the loan, so, the short sale has to pass their guidelines, then go to the mortgage insurer if there is one, then to the end investor like Fannie Mae and Freddie Mac. If you are a buyer and can’t wait at least 60-90 days for an approval and then another 30 days to go to closing, then you need to look at other houses. The worst thing you can do is tie up a house that is in a short sale with no intention of being patient while waiting for a short sale approval. Approvals can come sooner than 60 days, but industry standard is at least 60 days to get an approval or denial. 2. There is a general assumption that you can purchase a short sale for 40-50% under its listed price. In a short sale the bank comes out and does a valuation of the property and will expect a slight discount, but will not accept a huge amount under the market value. Hopefully, if the agent who is handling the sale is experienced, they will have already gotten an approved list price from the bank by the time you are interested in making an offer. The bank will usually be willing to negotiate on that price, but will not, in almost every case, take 40-50% off of that price. To that point, you may be able to get a reasonable deal on a short sale, though it will not be, in most cases, as much of a deal as you may be able to get on an REO (foreclosed property). Also to that point, most short sales will be in better condition than an REO. When you look at the potential repairs a comparable REO needs and the time and expense it can take to do those improvements vs. a short sale being sold at a slight market discount with improvements already made, the investment could even out. There are REO properties that can be picked up for a huge discount, but require massive repairs that a comparable short sale may not require. 3. Short sales are a very difficult process and it takes a qualified person to handle this type of transaction. With this type of transaction it takes a very experienced agent on the listing side as well as the buying side. Make sure before you move forward on the transaction that the listing agent has ample experience dealing with these types of transactions, or you could be tied up in a contract for months that never goes to settlement. There are several different types of short sale processes and each bank’s process is somewhat different; it takes a professional who has had experience with all of these different types of short sales to help2 of 8 6/26/2012 11:04 AM
  3. 3. Are You a Buyer Looking to Purchase a Short Sale? facilitate a successful transaction. 4. In most short sale transactions the properties are sold “as-is” and no repairs will be made. Although there are some exceptions to this rule, speaking in general, short sales are sold “as-is” and no repairs will be made even if they are found during a home inspection. In most short sale transactions the bank will require both the buyer and the seller to sign an addendum that states the property is being sold “As-is” and no repairs will be made. These are just a few short pointers for buyers who are looking to purchase a short sale as they are a reality in every market, and if you have the patience you may be able to get the home you are looking for at a discount! 15 1016 256 Share Tweet About The Author Brandon Brittingham is considered a leading national resource on foreclosure prevention and short sales. Brandon has been involved in over 400 short sales, and is the co-author of the SSC (Short Sale Certified) designation. Brandon has trained over 2000 real estate agents nationwide on short sales and how to help homeowners prevent foreclosure. He has worked with several major lenders to help them develop processes to streamline their short sale and loan modification processes, and has been a Regional Top producer in his area for the last three years and was recently acknowledged by Realty Alliance for being in the top 5% of realtors in North America.3 of 8 6/26/2012 11:04 AM
  4. 4. Are You a Buyer Looking to Purchase a Short Sale? 7 comments • Discussion Community " TR • 2 months ago The biggest concern for buyers and their agents when approaching a short sale IS Making sure the seller, their broker and or the sellers negotiator KNOW what they are trying to do and the property actually has a chance of going SHORT ! So much time wasted due to property not being set up right in the first place. We try hard to qualify the listing from the buyer side prior to really even considering it. Most short offerings still today in our market are just "blind auctions" or "price drop trolling", BE CAREFUL. Short sales are challenging, more are coming - so do not always believe what the listing says. Ask the listing agent questions What kind of short ? how has the seller qualified ? Do they have a listing package to the bank ? Do they know who is on title and mortgage ? If they cant or will not answer these basic questions, take your buyer and run - otherwise buy a large bottle of aspirin and hold on for the Sideways ! Try to get 3rd party authorized from the seller on the BUYER side. TR 2 • Reply • Share › TLC • 2 months ago I have found that depending on the type of loan and who the lender is the BPO/Appraisal will not be ordered until you have a sales contract. You should be listing short sales just under market value and then adjusted for any repairs that must be done. If youre not getting much traffic on line and off then drop the list price monthly just make sure you send the lender the traffic history once a contract is received along with the list of repairs if any with price quotes. As long as you can justify the sales price you have a good chance of an approval or a counter price that is reasonable. 1 • Reply • Share › Rogervining • 2 months ago Timely subject. many listing agents of short sales usually list at a lo ball price just to get a bid to submit to the bank so it is better to see one thats been on the market a while or call every listing agent of a short sale to see if bank has agreed to a listing price BEFORE wasting buyers and Realtors time. 1 • Reply • Share › Shanna • a month ago Do you happen to have any statistics about the % of short sales going through that are in4 of 8 6/26/2012 11:04 AM
  5. 5. Are You a Buyer Looking to Purchase a Short Sale? Previous post: Short Sales Will Increase Dramatically in 2012 Next post: Short Sale vs Foreclosure – 10 Common Myths Busted Search For Posts Popular Posts Short Sale vs Foreclosure – 10 Common Myths Busted Will Mortgage Forgiveness Debt Relief Act Be Extended? The Unspoken Appraisal Problem Everybody Calm Down! The Sky Is NOT Falling Home Prices: It’s About Supply & Demand New Single Family Homes: 2011 vs 2006 Another Positive Report for Real Estate Want More Articles? @KCMcrew on Twitter tonymaurer Experts Say Housing Prices Are5 of 8 6/26/2012 11:04 AM
  6. 6. Are You a Buyer Looking to Purchase a Short Sale? About to Turn ~ /06/26/exp… via @KCMcrew 4 hours ago reply retweet favorite CRSConnect Infographic: Under-35 Population Staying Home Not Buying One via @KCMcrew 3 days ago reply retweet favorite CDPE Which is Better: A Rental or Your Own Home? @KCMcrew /2124433073… 4 days ago reply retweet favorite alexcharfen Great info from Steve Harney! #charfen @cdpe @KCMcrew Short Sales Skyrocketing 6 days ago reply retweet favorite HoulihanRE "Shadow Inventory" falls to levels not seen since 2008 according to this @KCMcrew article: 7 days ago reply retweet favorite Join the conversation The SHI SHI (shē) n. the spiral adopted by Keeping Current Matters that symbolizes the continuous change of real estate and its current practices. The KCM Connect6 of 8 6/26/2012 11:04 AM
  7. 7. Are You a Buyer Looking to Purchase a Short Sale? The KCM Crew Like 12,675 people like The KCM Crew. John John Vance Pati Camille Eileen Jonathan Paul Bill May 2012 M T W T F S S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 « Apr Jun » Archives June 2012 May 2012 April 2012 March 2012 February 2012 January 2012 December 2011 November 2011 October 2011 September 2011 August 2011 July 2011 June 20117 of 8 6/26/2012 11:04 AM
  8. 8. Are You a Buyer Looking to Purchase a Short Sale? May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 September 2009 The KCM Crew on +292 Like Pati Maez, John Coats and 12,673 others like this. Copyright © 2012 Keeping Current Matters, All rights reserved8 of 8 6/26/2012 11:04 AM