Short Sales Process For Buyers
Short sales are NOT short!
In the midst of several short sale negotiations, experience tells me home buyers do not know what Short Sale means. While visiting a past client yesterday, she asked if a short sale meant the seller was trying to sell fast. In theory, that is usually the case. The seller is trying to sell fast to get out of a home they can no longer afford. In practice, it rarely happens fast. The process can be long and drawn out with twists and turns not found in a traditional home purchase. A short sale – in simple terms - means the bank or investor is being asked to accept less than is owed on the property. Banks and investors really don’t like losing money – who can blame them, most of us don’t! As a buyer, what does short sale mean for you?
Where are the deals?
Although there are deals to be had in short sales, you generally are not going to get a steal. Banks are fairly savvy and know what the value of the home is. When they start a short sale file, one of their first actions is to have the home appraised or what is called a Broker Price Opinion (BPO). Just because it is a short sale doesn’t mean they will accept any offer. They have guidelines which determine the loss they will take on a particular property.
You have to be patient!
This is not easy to do when you are waiting for an answer. If your offer is the first offer a bank has received on the home, your wait time will most likely be longer. Most banks do not want a short sale file until there is an offer. Being the first offer may mean a month to six week wait for an answer.
Banks always have the final word!
All offers are subject to bank approval from the sellers lender. Generally the bank will send a demand statement with their terms. You will then have the option of accepting their terms or not. Much like a counter offer, except the banks counter offer is final.
Property is AS-IS
Many banks have special addendums which state the property is being sold “as-is”. You can still have an inspection, but the bank will not be doing any repairs. Any repairs would have to be negotiated with the seller, but remember, the seller is facing foreclosure and may not have the funds to repair any inspection items noted for repair. Short sales are not easy or fast, but the rewards of equity can be a payoff for your time and patience. Much of the burden of the process lies with the agent who has the home listed and whether they have submitted a complete package to the bank.
A gentle reminder – your agent can not make the bank work faster – it is a process! Believe me, I have tried!