Are Short Sales For You?

by Mario Acosta on March 11, 2013

in Buyers, First-Time Home Buyers, Investors, Short-Sale

If you are a first time home buyer, today’s market may be all you know, and so may not seem as strange to you as to someone who has bought a home a decade ago. That is because more than half the homes (ok a lot more than half) are Short Sales. The world for those of you shopping again – well the world has indeed changed. It may even seem like it’s on its ear.

Gone, it might seem, are the days of the simple, fast transaction. And, unlike vinyl records, I don’t think there is going to be a resurgence any time soon.

Now don’t get me wrong, if you are patient and in no hurry, if you are looking as an investor only – and don’t get your heart set on just one house – and if you are a buyer in pursuit of a great deal – this is your marketplace. But if you are looking for your first home, or next home to live in – you may need to carefully evaluate the houses you are considering. So, when you are looking and you see what seems to be a great deal you can almost count on it being a short sale. Enlist a Real Estate Professional you trust to help you out. They can tell you if it is a short sale, and at what stage of the process the home may be positioned.

Because, if you are looking at moving into a home anytime soon you might want to think twice about making an offer on a pre-foreclosure, or short sale home. It is just not as simple as you may believe, and very few can close in 30 days or less. Many home buyers have waited 4 to 6 months to close on a short sale, sometimes longer. As you know many people have lost their homes to foreclosure, or are walking away from a home that is upside down. In these cases the homes becomes a short sale. This means that the lender is accepting a discounted payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it. Even if you come in at the price listed.

With a short sale – gone are the days of standard style negotiation. They ask a price. You make an offer. They counter. You counter. A compromise is reached and the house gets sold – and thirty days later you close. You are now making an offer to a unknown committee it seems. Owner, lender, second, HOA ….

The process can get very complicated. This is being told to you by a professional who deals with industry quirks every day. So many things can factor into the decision – are there two loans, or just one? HOA lien? A third hiding out there in the woods? Who is involved in the deal? Do they have experience? It’s one strike against you if the listing agent has never handled a short sale, but it’s even worse if your own agent has no experience in that arena. You need an experienced agent who knows the in’s and out’s of the process.

An agent with experience in short sales will help to expedite your transaction and protect your nterests. You don’t want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner.

Once the seller has accepted your offer, it has to be sent to the lender for approval. You do not have a deal until the lender accepts. The more loans, the more people involved, the less experienced they are – complicated it gets.

Many buyers write multiple offers on multiple houses and see who moves along faster. But this is difficult, it is not an investment but a house, and a buyer can become emotionally attached to as a prospective next home.

Some lenders submit short sales to a committee, but most can take as long as two to three months to make a decision. If you work with and experienced person to represent your interest, you won’t be working blind. They will know the timing and who is involved and guide you in the process. Otherwise it can get unbelievably frustrating. I have known buyers who completely gave up and went out and rented a house. It was all just too much.

So talk with a trusted agent who knows the lay of the land and can help you decide if the short sale path is right for you. You can discuss the ups and down sides of it. If you are willing to wait and be patient, not get too set on any one property – you can get a great deal. But remember prices are historically low right now as are interest rates. This means you can get a non short sale at a very fair price, with reasonable terms and a much faster offer to close time frame.

All things considered for many buyers, this is a better route. A good Agent can walk you through the numbers and timing to help you make the right decision for your situation. There are a lot of conventional sale homes, at a very fair market value that your trusted agent can help you locate, look at, and compare a few houses that meet your needs to make sure the next house you buy can become a great home.

Talk to you next week.

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Post by Mario Acosta

Mario has written 117 articles.

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