Austin Texas – Any home buyer will inevitably run across a property listed as a Short Sale. A short sale is an attempt by the current owner to sell a home short of what is owed (including seller closing costs and back taxes) in lieu of their lender taking their home back through foreclosure, thus saving their credit rating and lifting the burden of the mortgage debt off their shoulders. The entire short sale process hinges on the hope that the lender will take a loss now, approve the short sale, eat the closing costs and back taxes, and not go through the costly process of foreclosing, cleaning the title, and reselling home later, post foreclosure, for a larger loss. The prospective home buyer that is buying the short sale at a discount is also hoping the seller’s lender will approve the short sale. So it is best the buyer should understand a few things in order to increase his or her chances of getting the short sale approved. Here are my Top 10 Buying Tips for Short Sales.
1. The initial list price is usually set by the short sale listing agent, not the short lender: The listing agent and the short seller often create a very low asking price in order to attract many buyers. The lender and servicer are normally unaware of the asking price; however, the short lender has the final say in what an acceptable purchase contract will be. Since the short lender has the power to ultimately accept or deny offers, and the buyer has to work his way through their servicer first before the short lender even sees or considers the short offer, the process can take much longer than anticipated. The bottom line is that the buyer needs to remain patient throughout the entire process, sometimes even for many months (waiting for that lender and servicer approval to happen).
2. One loan is better than two or three: If the short seller has loans (1st, 2nd, HELOC) owned by two or more different banks/lenders, it is a lot more difficult to approve the short sale since you have to get them all on the same page. This is something the buyer agent or the buyer cannot control; it simply depends on the willingness of the lenders involved. Buyers should know that when the short seller only has one loan with one lender, the short sale often becomes more buyer-friendly since it is more likely to be approved. A savvy buyer agent can find out this type of information for his buyer.
3. Low offers normally get no response: When low offers are sent into the bank they are often rejected, and give the prospected buyers and buyer agent little or no feedback. Even good offers take a while to get a response due to the high volume of transactions lenders are inundated with these days.
4. The buyer must consider sold comparables before submitting their short offer: This will give the buyer agent (and the listing agent) appropriate proving grounds for nailing a sales price that will be more likely to be approved by the short lender. Checking comparables will also give the buyer a better knowledge of what price homes in the neighborhood are selling for now (both distress properties and non distress properties) and ultimately make them a more informed home buyer.
5. Don’t get your hopes up for just one property: Short sales are not short in time. It can sometimes be a very long process (3 to 12 months). Keep your options open and continue to actively look at all opportunities. In most areas it is completely legal and risk-free to have multiple offers out on multiple properties at any given time with the proper contingencies to protect the buyer.
6. Not all sellers will qualify for a short sale and/or may be asked to pay some of the difference: Sellers that own more than one property or have strong financials will probably not be eligible to short sale. In some cases the seller may be asked to pay the difference of the sale or part of the loss. The seller might even be required to sign a promissory note to get approval from their lender (stating that they will pay back all or some of the debt). This has no effect on the buyer as long as the seller cooperates. But if the seller is hit with this requirement and he does not want to comply, it can kill the deal for the buyer.
7. Approved Short Sales go much quicker: It is important to remember that short sales are not always fast; however, making an offer on an “approved short sale” (lender has already approved both the price and the seller) can be a quicker deal for the buyer. These approved short sales are the most desired by buyers and investors. They have the highest chance of closing.
8. Some short lenders want strong buyers, and some want strong offers (some want both): The short lender has all the power in approving the short sale. The short lender can pick the most appealing buyer, which may mean different things to different short lenders. Some short lenders may prefer cash buyers or buyers with large down payments while others just want the highest price regardless of down payment. Many buyers want to know if they will get a deeper discount for an all cash offer. This is very hard to predict and one will never really know until they make an offer.
9. Short Sales are As-Is sales: If repairs are needed, even if they are necessary to get the buyer’s loan approved; it is unlikely that they will be done by the short seller or short lender. The buyer must be willing to take the responsibility of fixing anything that is broken. The buyer may even need to have the utilities turned on at their expense for inspections and/or appraisals.
10. When the buyer gets an approval from the short lender, you must close on time: During a short sale escrow period, there is no leniency with the closing date (as there is in a traditional sale). During a short sale, exceptions are rarely made and the buyer must close on time. Because of this, it is important to take care of all buyer loan paperwork immediately after opening escrow and make sure you are working with a top notch loan officer. If there is going to be an issue that will prevent closing on time, a request for an extension will need to be made immediately with the short lender. If the request is made early enough, many banks will grant an extension (if the reason is valid) but don’t just assume it will happen. If your reason for the delay is not solid; they will reject your extension.
Buying a Short Sale can be a great opportunity to to buy a home well below market value. A Short Sale can also be a major headache that lasts for 6 to 12 months (or even longer). This is why it is important to have a good understanding of the factors that lead to a successful short sale transaction if you are thinking about buying a short sale.
Thinking about doing a Bank Short Sale to avoid Foreclosure? Or thinking about Buying a Bank Short Sale?
I can help you short sale your property and get back on your feet. I can also help you buy a short sale. Send me an e-mail at GeorgeKiefer@gmail.com. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at (512) 970-0709
Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.
Thinking about a loan modification? Our Austin loan modification kit has the instructions you will need to get a loan modification approved with your bank. Click here to request a copy.
Thanks for reading this, George Kiefer, GRI, CDPE, Broker.
George Kiefer holds the CDPE designation (Certified Distressed Property Expert).
George Kiefer is a Real Estate Agent and Broker-Associate at Keller Williams Realty in Austin Texas.
Austin Short Sale REALTOR: George Kiefer Phone: (512) 970-0709 GeorgeKiefer@gmail.com
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George Kiefer specializes in loan modification assistance and short sales in Austin Texas. Austin Loan Modification Help, Austin Short Sales. Austin Short Sale Realtor Austin Texas Short Sales. Austin Realtor.
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George Kiefer, Keller Williams Realty, and the Stop Foreclosure Institute are not affiliated in any way, shape, or form with the government. Our services have not been reviewed or endorse by the government or your lender. Most lenders willingly work with agents on short sales. Why?
Because most short sales are beneficial to a lender. If you accept our offer to help you on a short sale, your lender may not agree to a short sale or to modify your loan. We do offer a loan modification kit.
However, the likelihood of negotiating a modification is like everything else in life. It takes work and persistence to convince your lender to modify your loan. No matter what you or we do, your lender may not approve a loan modification.
We do not recommend that you stop paying your mortgage, because this will cause damage to your credit and could cause you to lose your home. Because we know avoiding foreclosure is so important to any homeowner, we recommend that you speak with the appropriate legal or tax advisor before making any decision.
This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing.
You have the option to reject a short sale or loan modification from your lender if it does not meet your approval. If you decide not to go thru with the short sale, then you do not have to pay us our fee. We normally make a real estate sales commission for helping you on a short sale.
The views expressed here are George’s personal views and do not reflect the views of Keller Williams Realty.
This information on Austin short Sales and Foreclosure is provided as a courtesy to our viewers to help them make informed decisions.
For a free list of foreclosure property with full addresses and color photos visit www.AustinForeclosureSales.com