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Friday, June 11, 2010

Las Vegas Short Sales

Buyers don't know what to do with short sales.  They have heard so many horror stories that they are often wary of writing offers on a short sale property.  However, if you dismiss short sales you are often missing out on some fantastic homes.

I have had many buyers make offers on short sale property and actually close on them. But, they are not for everyone.  Here are a few questions I often come across from buyers and my answers.  Please remember, these are general answers.  Every situation is different.

Does it really take a long time to get an offer accepted?
Once you put in an offer it is still taking up to three months to get an answer.  Often during that time there are few updates from the parties negotiating the short sale.  A buyer needs to have immense patience while waiting.  I will ask for updates from the listing office every two weeks.  However, the updates are usually - "the file is being processed."  That is often all the listing office can get from the seller's bank.

I'm very diligent and keep up with the listing office.  I have done enough of these (on both the buyer and seller side) and know the process.  I can get a very good feel from speaking to the person working on the file whether it has a chance or not.

Why does it take so long to get an answer? 
Bureaucracy - a specific set of documents need to be submitted to the seller's bank, these get checked and then there are other things that are needed to complete the file such as property valuations, etc.  Plus, there are departments for everything - one checks the files, one negotiates the file, one approves the file, one issues the approval ....

Are all short sales approved?
There are no guarantees.  Numerous things can happen during the process.  It isn't always the buyers who get tired and walk away from a short sale.  The short sale could not be approved, the property could be foreclosed upon prior to approval, the seller could get tired and decide to just let the property go, the seller could declare bankruptcy.   Also, the short sale approval could come back with terms that the seller or buyer do not agree upon.

Can I still make other offers while waiting for a short sale to be approved?
That depends upon the buyer.  Once your offer is accepted by the seller, you have a contract.  In the purchase agreement you specify how long you are willing to wait for short sale approval.  Some buyers feel comfortable to keep looking and trying to find something else during that time.  Others decide to wait the process.  The decision to wait or not is specific to each buyer.

How long do I have to agree to wait for short sale approval?
That is up to you.  It can take up to 90 days for approval.  But, you can specify as many days as you want.  The time frame can become a negotiation issue.

While I'm waiting for the approval, can another buyer come in and make an offer?
The short sale addendum we use addresses that issue. Yes, technically that could happen. A listing agent is required to show all offers that come in on a property.  But the addendum gives you the right to meet the terms of the new offer.  If you are willing to meet the new offer your offer will stay in place.  If not, then the other offer will be accepted. 

Generally, this doesn't happen because a new offer can sometimes cause the seller's lender to close the ongoing short sale file and require the seller to start all over again.  Most agents in this area will keep a new offer that comes in as a back up in case the current buyer walks away.

Are short sales better deals than bank owned properties?
Short sales generally sell at market price.  In fact, a recent Bank of America executive has stated that with short sales the goal was to get at or above market value.  Part of the short sale process involves the bank getting valuations of the property from area appraisers and real estate brokers. They have a good idea of property values.

Any other pitfalls to a short sale?
Well, the waiting time can affect your loan.  You may find your loan product could disappear or change.  You can't lock your loan rate because we don't have an approval.  Your credit report could change due to purchases and that could affect your loan as well. 

I have a friend who .....
Everyone's experience with a short sale is different.  Each file is different because there are different parties involved.  Don't take one person's experience and think that is what will happen with yours.  Your job is to be patient.  Your agent will handle the ups and downs. 

Why would anybody make an offer on a short sale?
Often there is something about the property that the buyer absolutely loves.  It could be a property with the perfect lot.  Maybe, the property has all of the upgrades a buyer wants.

I personally don't discourage my buyers from making an offer on a short sale.  I think that if the buyer is aware of the potential pitfalls and is willing to be patient then go for it.

Interested in purchasing a home in our beautiful city?  Visit my Website at SoManyHomes.com

Enjoy the weekend,

Cindy

Image: djcodrin / FreeDigitalPhotos.net

1 comment:

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