There Are No Short Sale Bargains The idea that a buyer is going to purchase a short sale significantly below market value should be dismissed; those days (if they really existed) are long gone. The reasons vary but the one constant is that lenders are not going to absorb the loss of a single dollar more than required. Lenders are verifying home values with automated systems, broker price opinions (BPOs) and in some cases, appraisals. In short, they are ensuring that offers accepted reflect current comparable properties. Despite what lenders publicly say, there is little motivation to complete a short sale; foreclosure is not a bad option for them or one they shy away from, especially in rising markets. Key points for buyers interested in short sales to remember: Most agents price short sales to generate offers, it is likely and often a virtual certainty that there will be multiple offers and that the rejected/accepted offer will be at or above list. Going in 20% lower is likely a waste of time. Lenders look at the net amount of an offer. A full price offer with 5% closing costs not a full price offer. Look at the net, lenders will. Keep the offer clean and simple. Cash is king and so is simplicity, focus on the net amount and demonstrate the ability to close quickly. The fewer stipulations and the shorter the time frames the better. Homes are almost always transferring “as is”, repairs are almost never completed. Do not be surprised if the lender counters. Most short sales are not “binding” until approved; it is fairly common for lenders to counter an offer that has been under review for weeks or months. Right or wrong, this typically happens as a result of their research on market value. In many cases, it’s wise to challenge poorly prepared BPOs and an experienced agent can often successfully appeal them. Do not be surprised if the process drags on and on. As noted, lenders are mostly ambivalent about short sales; foreclosure is not a bad thing for them. As many former owners and many buyers will note, dealing with the bureaucracy can lead to aggravation, stress and ulcers. The most important thing for a particular seller and buyer is merely one of hundreds for a lender, and they treat it as such. Do not be surprised if the deal falls apart. A short sale has many variables that are completely outside of the buyer’s control. Of all involved, the buyer has the smallest and least influential role after the contract acceptance. Often, buyers grow weary of the process and terminate realizing that the ends do not justify the means. The main takeaway for home buyers chasing a short sale is to understand that it is pointless to “low ball” a home as the lender is highly unlikely to approve it, in the end it’s going to come down to the contract reflecting the market value of the home. Remember, the seller likely cares less; they are already drowning so it matters little if it is in ten feet of water or a hundred feet of water, they are apt to accept anything to move things along. Thank you ReMax Tri-County for article.
Posted on: Sun, 27 Jul 2014 21:27:17 +0000
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