When I wrote the previous blog post, I described a few Short Sale specific characteristics, but noticed that there was so much more to consider if a buyer still wants to join the”Short Sale Fun.” It was clear to me a second blog post was necessary.
Please also note that these are my experiences and that most likely each county and state has their own procedures. Talk to your real estate professional.
How far has the short sale process progressed?
A short sale can take a long time. Knowing where the short sale is in the short sale process will be very helpful.
- Seller has not submitted his paperwork yet [Hardship package]= Short Sale is at the very beginning, expect a long time. At least 4-6 months to short sale approval (SSA).
- BPO (broker price opinion) or an appraisal has been conducted = you are in the last quarter of the short sale. At this point you are still looking at 4 to 8 weeks, depending on the lender, until short sale approval letter is issued by the bank.
- The bank has done an appraisal and a written-in-stone sales price has been determined by the lender. Usually, this is being advertised as such in the listing service and your agent will be able to tell you. You are looking at 2 to 4 weeks until short sale approval, depending on lender.
Is the Seller cooperating fully during the process?
If the seller stops providing paperwork and becomes uncooperative, then your short sale is pretty much done (been there done that. It only gets better if the listing agent has disengaged as well), as it can not be successfully negotiated without the sellers cooperation.
[When] Is the foreclosure scheduled?
For El Paso County, go to El Paso Public Trustee and start your search by submitting the address of the home that you are intending to offer on. If the foreclosure date is not at all scheduled or quite far out, then this is a good sign. If it is within the next 4-8 weeks then this might warrant a question to the listing agent or short sale negotiator if he/she believes that the purchase can be conducted before the foreclosure date or, alternatively, if the foreclosure will be postponed.
How many liens are on the house?
It is obviously much easier to deal and satisfy only one lender than several, sometimes that can have an influence on time as well. You or your agent can get an O&E (Owner and Encumbrance report at your local title company. It costs about $5). There are other issues to consider, that are very mortgage specific that your short sale negotiator or the listing agent must consider in pushing the transaction forward.
Don’t expect any repairs by the seller/lender
Chances are the seller will not have any money to repair any items in the home. It will be crucial to try and determine early in the process if your (buyer) will lend on your home or if he requires a “repair escrow.” All of which could potentially be an ‘issue’ for the sellers bank.
Tip: Expect delays
It WILL happen at some point in the process.
Tip: Have your lender and your loan ready to go
If necessary keep working on improving your credit score, you will be rewarded with lower interest rates. Keep saving money to grow your down payment as much as possible to lower your monthly payment and save big bucks over the lifetime of the loan.
Tip: Avoid contingencies.
The lender will usually not accept an offer that is contingent upon selling your home. Too many moving parts and eventualities for the bank – especially if there are multiple offers, a contingent offer will not stand a chance to be accepted.
Tip: Be quick and look for good bones.
I personally believe that short sales are really not that great of a deal anymore. If you are quick – best is to get listing alerts for your Realtor– and you are able to look past the clutter, poor staging and maybe look past some really other odd things in the home, then you can sometimes snag an even better deal than a short sale. Try it! I have heard other Realtors® say as well: You can change everything about a home except for the location. So be flexible and fast! I am here to help you!