How To Buy A Short Sale Without All The Frustration
I am noticing a growing trend of frustration among people who want to buy a short sale.
Nothing has really changed in how the banks are handling the processing of short sales, so I'm thinking that today's buyers are less informed about the commitment required to buy a short sale.
Since we do not always get to communicate directly with buyers working with other real estate companies, we have decided to develop an additional disclosure that buyers will have to sign if they choose to buy a short sale listed with our company.
Nearly 20 Percent Will Buy A Short Sale In 2012
First of all, we need to address the issues that people will face when they buy a short sale. Nearly 20% of all homebuyers in 2012 bought a short sale, and the number is growing.
When we show this real estate graph next year, the number will likely be higher. Why? Because distressed sales are nearing 40% and growing right now, and banks still favor the short sale as a solution to non-performing loans. Just take a look at the list of distressed homes for sale in Tallahassee today and you'll see why we expect high closings in the near future.
New Disclosure When You Buy A Short Sale
Most of the frustration that I have seen from people who chose to buy a short sale was over situations and delays that they should have been warned to expect.
In order to provide better service and better prepare all buyers who buy a short sale from Joe Manausa Real Estate, we are preparing a short sale disclosure that might contain the following warnings:
- After the lender receives the short sale packet, the lender may require at least 40-60 business days to approve the short sale. After approval, the sale must close within lender approved time frame, typically 30-45 calendar days. It is common to receive no updates, no contact, and no communication at any time from the lender. Often times, this frustrates buyers as they feel as if they are being ignored. In other words, it is highly likely that you will not be able to buy a short sale in less than four months from the date of contract, and during that time, you will feel as if you are being neglected.If you believe this will frustrate you beyond the value you are saving when you buy a short sale, then you should consider buying a home that is not undergoing a short sale. In other words, be prepared to be frustrated during the attempted approval period.
- The seller will receive no cash from this transaction (unless it is a HAFA short sale). Any funds usually due to the seller will be paid to the lender.
- The seller will bring no additional cash and thus will be unwilling to pay for any closing costs, such as the buyer’s appraisal or home warranty. Should the buyer desire a home warranty (recommended by Joe Manausa Real Estate), they are free to purchase one prior to closing.
- The seller may be unable to pay for maintaining the property. Flaws in the property will remain in the current condition through closing; the seller will not be able to make any repairs to the property.
- Should buyer purchase a professional home inspection (highly recommended by Joe Manausa Real Estate), the seller will not agree to any requested repairs. This is important to note because many borrowers’ lenders are going to require certain repairs as a condition for loan funding. Buyer understands that these additional costs will be borne by buyer should buyer proceed to closing.
- Buyer must communicate to seller through buyer’s real estate agent. Any attempted contact by buyer directly to the seller’s listing agent, the lender, or the seller directly will be ignored as a courtesy to all involved parties.
- Buyer and seller are advised that to a degree, all short sales are unique. Every transaction will be assigned to a loss mitigation specialist who will proceed based upon the current needs and goals of the lender for which she or he serves. Needs and goals change on a regular basis, so buyer is advised that any “past experience” might or might not be applicable in this short sale.
- Buyer and buyer’s agent acknowledge that Joe Manausa Real Estate handles multiple short sales and thus requires an organized system of communication in order to best serve all of our sellers’ needs. Buyer and buyer’s agent will receive a link to a communications site in order to be kept abreast of the latest actions on the short sale approval process. Calls made to the listing agent will most likely be ignored if the information is already available on this site. As you might expect, our short sale agent is thoroughly engaged in processing short sales and cannot commit to making phone calls that do nothing to further communication or the process of closing the sale.
So, did I leave anything out? If you think of something that belongs in the new disclosure, please comment below.
The goal is to warn buyers so that they do not put themselves in a position of high stress.
There is an indefinite waiting period that must be tolerated in order to take advantage of the financial benefits when you buy a short sale.
There is also the potential for additional costs for repairs or improvements that might not be visible on a cursory tour of the house. Trust me, the seller is not going to pay for problems that you find when you buy a short sale. Either you will pay for the repairs, or you will need to walk away and start the process all over again at another home.
Most people who chose to buy a short sale from Joe Manausa Real Estate were very happy as they knew what to expect. They got great deals and now have wonderful homes that they enjoy.
If you want to buy a short sale, just drop me a note and I can set you up with a buyer specialist who will walk you through the entire process, from start to finish.
*Joe Manausa Real Estate is a brokerage company headquartered in Tallahassee, Florida. Its unique business model provides specialists to both home sellers and home buyers, and the results speak for themselves. JMRE has significantly more 5-star reviews on google than any other local competitor. Joe Manausa Real Estate is a leader in internet marketing and utilizes search engine optimization, email marketing, social media and data analytics to get their clients’ home sold faster and for more money than any other Tallahassee brokerage firm. For more information, visit www.manausa.com or call us at (850) 366-8917.
In Colorado we allow a minimum of 120 days from execution of contact for the bank to approve the short sale. This is usually tight and sometimes requires extensions if all parties still want to proceed. We have also found that banks are less likely to approve the short sale recently as the perceive the market improving and are demanding more money for the home. We have had 2 short sales fail in the last 2 weeks - one the bank flat out denied and the other the bank came back and asked for more money - way over market value. We have so few short-sales and bank owned properties in our market that our clients usually get better deals, with more certainty, buying from motivated sellers than waiting on a bank and a bureaucrat in some office in somewhere to make a decision.
Post a Comment