Can You Get a Better Deal on a Short Sale?

You don't know how many times I've been asked this question "Can I get a better deal on a Short Sale rather than a Foreclosure?" A better price? I'm not so sure about that. I sometimes think buyers think the word "short" means something else; perhaps "little" as in I can pay very little for this property or "low" as in let's low ball the bank......I can go on and on. For some reason, some buyers, not all of them, seem to think the banks are desperate and will take any offer just to get the property off of their books.

I don't blame buyers for wanting to get a good deal. Who doesn't want a good deal? But the truth is, lenders will evaluate the offer based on comparable market activity and not just accept anything. They hire a professional to determine the value. Typically an appraisal or a broker price opinion (bpo) are done and sent to the bank. If the BPO or appraisal match come close to the offer, then approval is likely as long as the seller meets the banks criteria for having a "hardship". If the offer is considerably lower than the banks findings, the lender will ask for more money.

This is where the agent needs to educate the buying public. Let's not keep a house under contract for a ridiculously low price; that's just irresponsible. No seller should risk several months waiting for the bank to issue a denial letter or worse yet, get an approval and the buyer is no where to be found! Yikes! C'mon now! There are people involved in these transactions with high hopes of moving on with their lives so let's not play games. Find out what the real market value is from your agent and put in a fair offer. In the end, you will be getting a great deal!

Contributed by Jeanine Corcoran
Coldwell Banker Ackley Realty
www.FLshortsalePros.com

3 Most Common Complaints about Short Sales thru the Eyes of a Buyer

In today's market, it seems that almost every property for sale is a distressed property: either a foreclosure or a short sale. Here are the top 3 complaints I hear from buyers that have had some experience dealing with short sales.

1. "They held my escrow money forever". C'mon folks, forever? I know 90 days may seem like a long time when you are waiting on your dream home, but forever? I guess it does seem like a forever if the short sale doesn't go through. My opinion on this is patience. Buyers have to have a lot of patience. Be prepared to wait a minimum of 90 days on the approval.

2. "The bank took so long to answer and then they countered my offer at a higher price!" I guess the first thing I want to know is, was your offer too low? Did you have your agent run the comparables of similiar properties to make sure you were putting in a good offer? My opinion......don't lowball a short sale. You will only be disappointed in the end result.

3. "I never received any updates from anyone" As frustrating as that can be, I hear this all the time. Unfortunately, your agent can only update you if they are receiving updates from the listing agent. My opinion on that is how about sending your realtor a friendly reminder but don't expect an update more than once week. Hopefully your Realtor won't need a reminder and is calling the listing agent once a week or every 10 days to get an update.

Contributed by Jeanine Corcoran
Certified Distressed Property Expert (CDPE)
Coldwell Banker Ackley Realty
http://www.flshortsalepros.com/

New Bill introduced to speed Short Sales

A bill named the “Prompt Decision for Qualification for Short Sale Act of 2011” was introduced in the U.S. House of Representatives in April which would require mortgage lenders to respond to short sale requests within 45 days from the time they receive it. Short sales represent about 13% of recent home sales. This bill may be a boon to thousands of home owners who are unable to keep their home and hope to avoid foreclosure. The short sale process is currently inefficient and time consuming and many potential buyers end up walking away from the sale because of long delays, which invariably causes properties to be foreclosed.

The National Association of Realtors® (NAR) is fully supportive of this new bill. NAR had been actively pushing the mortgage industry to revamp the short sales approval process. Short sales are beneficial to lenders because they cost less than foreclosures and it also reduces the negative financial impact on borrowers. Ron Phipps, the president of NAR said “as the leading advocate for home ownership and housing issues, Realtors® want to help more homeowners avoid foreclosure by facilitating a short sale when a family is absolutely unable to keep their home; however, that can only happen if lenders and servicers approve short sale offers in a reasonable amount of time.”

Here’s the problem with the current situation. There are many decision-makers involved in the short sale process including buyers, sellers, investors, servicers, insurers and lenders. All of them must agree to approve or reject each sale. Lenders find it difficult to decide if they must approve or deny a sale. Sometimes this could cause several months of status quo, resulting in potential buyers getting frustrated and canceling their contracts due to a lack of response from lenders, and this results in properties being foreclosed.

According to the proposed bill, the servicer must notify the borrower about the status of their sale within the 45-day deadline. The notification may include approval or denial of the sale process, or a request for additional information and paperwork.

Phipps also stated that “streamlining short sales transactions will reduce the amount of time it takes to sell the property, improve the likelihood that the transaction will close and reduce the overall number of foreclosures. This benefits sellers, lenders, buyers and the entire community.”

This bill has the potential to dramatically reduce the inventory of foreclosed homes across the country. However, it has not yet been assigned to a committee. A similar bill with the same title was introduced in September 2010, but it did not make it to a House committee for debate before the end of the legislative session. NAR has urged Congress to pass this new bill quickly. When passed, the bill would provide much needed relief to millions of home owners by helping them prevent foreclosures. It will also reduce the financial hit on lenders and servicers.

Five Tips for Putting in an Offer on a Short Sale

If you are like most buyers, when you find that house you want, it doesn't matter to you if it's a bank-owned property, a regular owner or a short sale -- but it should. Here are 5 tips you should know when putting in an offer on a short sale:

Tip #1 - Have your realtor find out as much as they can about the seller who is short saling their home. Questions like: how many mortgages does the seller have? Do you have all of the necessary paper work from the seller already so it doesn't hold up the process? Is the seller responding quickly to his/her realtor for anything needed from their lender? These are just a few.

Tip #2 - Put in a good offer for goodness sake! Have your realtor do a price comparison before putting in your offer. There is nothing worse than the seller's lender coming back to you after waiting all that time and asking you for more money.

Tip #3 - If you are financing, get your preapproval through a major lender not Bazooka Bubblegum Fiancing thus showing the lender you are a serious buyer.

Tip #4 - Deposit your escrow money. Once the contract is fully executed (signed by buyer and seller), deposit your earnest money. Again, showing the lender you are serious.

Tip #5 - Be prepared to be patient. Allow at least 90 days to get an answer. If all goes well, it may not take that long but then at least you are prepared.

Contributed by Jeanine Corcoran - Madden
Certified Distress Property Expert (CDPE)
http://www.flshortsalepros.com/