I have represented sellers in short sales and my basic conversation with buyers about short sales is "just know it will most likely take a long time to close and Be Patient!"
After representing a first time buyer who was getting married last August, I learned a few more things to say and how to advise buyers - particularly with all the short sales currently on the market. My clients put an offer on a home in April and I advised them to keep looking--something better may come on the market. If not, we always have the offer on this one. We put two more offers on homes in the meantime and when August rolled around and they were married, they still did not have a home. In fact, most of the homes they liked were listed as "contingent on third party approval" (short sale). However, one of their offers was on a foreclosure and, just when the agent called to say they had an accepted offer, they called back hours later and said the bank pulled it for auction.
As a side note, the auction did not bring the minimum required and my buyers saw it back on the market for about $25,000 less than they offered. They were glad they didn't buy that one. I do tell my buyers that if they do not get their offer accepted it was for a reason. Usually they find a home they like much better - it has never failed. In this case, my buyer found out their job may be outsourced and preferred to rent until all was sorted out. So, for them, the reason was they were going to lose on their investment in more ways that one-worked out for the best.
If you are a buyer looking at short sales, keep these thing in mind:
- Find out if the home has gone to Sheriff's sale. When a buyer wants to see a short sale, this is the first thing I check. If the seller is in the redemption period, banks will usually give this priority.
- Find out if the sellers are in default on their mortgage. If it hasn't gone to sheriff's sale, I always call the listing agent to see where their client is in the process. Next to an actual Sheriff's sale, banks usually give priority to sellers who are not making payments.
- Find out if the sellers have filled out and submitted their hardship package. Sometimes banks will not take this until there is an offer so even though they are in default or the redemption period, there is a lot of paperwork that must be completed which extends the time it will take.
- If sellers have submitted a hardship package, find out if there have been previous offers. Since the banks often accept the paperwork only when an offer is submitted, there is an opportunity to find out if the banks have turned down an offer and to establish a price the bank may be willing to accept. Also, if a hardship package has been submitted (with or without offer) indicates a possible shorter time in getting an offer to closing.
- Put a week or two maximum on how long your offer is good and keep looking. With all the redemption periods ending and new foreclosures coming on the market, a better home may become available. If you get an accepted offer on another home, your previous offer can be withdrawn in writing via e-mail or fax almost immediately once the time expires. The listing agent will continue to negotiate the short sale until your offer is withdrawn.
- Be patient. In a majority of cases, it takes much longer to complete a short sale than a private sale and a foreclosure. If you have not found another home you like better, it may be worth the wait.
For the most part, short sales are a good purchase. They are usually at foreclosure prices and in much better condition. Often times, the seller is still living in the home and maintaining it. Foreclosures, while rock bottom prices, are often in disrepair to say the least and totally trashed at worse. In a short sale, the seller is trying to do the right thing to lessen the impact on their credit. They are taking a proactive and responsible approach to selling their home and can definitely be worth the wait.
I have represented both sellers and buyers in the short sale process. If you have any questions, please contact me.
Metro Detroit Realtor selling Real Estate in Southeastern Michigan. TishHouse sells Houses - selling Oakland County Real Estate with RE/MAX Showcase Homes in Birmingham, Michigan. Helping People in a challenging market by specializing in Short Sales. See what my clients have to say about my extraordinary customer service. Follow me on Twitter.
