Do you know how to purchase a Short Sale? Do you know what a Short Sale is, and how they work? Do you know how to find Short Sales? Last year, approximately 15% of all our area's sales were short sales. In this buyers market, it is imperative that you align yourself with a realtor who knows how to navigate the many pitfalls of the Short Sale process, from a buyers perspective! Our office handles many Short Sales for both Buyers and Sellers. We are in constant daily communication with several banks and asset management firms negotiating Short Sales. We are experts in the Short Sale process and can help you every step of the way. Take a look at our Short Sale list(s) to the right. Remember most public realtor websites on the internet can not post all the Short Sale properties. If they are listed in our MLS as private, these websites can not access them. The only way to get ALL the Short Sale listings in our area is to sign up for your Custom MLS Portal. (Click Here).
First, from the buyers perspective, there is nothing "SHORT" about a Short Sale. Purchasing a short sale can be very frustrating, testing, maddening, and wearisome. The process can take upwards of 6-9 months only to fall apart at the last minute leaving you (the buyer) at square one and with several gray hairs. If you don't have a professional "Short Sale" Realtor representing you and also representing the Sellers, you can have a horrific experience that will forever turn you off the Short Sale market! Okay, now with that said why even bother with Short Sales? Because there are some very good deals to be had! Banks know all too well how expensive the foreclosure process can be and are becoming more and more willing to negotiate with buyers and their offers. If you have a dedicated, experienced, and seasoned Realtor who is intimately involved with the Short Sale process, you can have a successful close in a matter of months. It really comes down to the specific property and it's circumstances. As a professional brokerage who specializes in many short sales each month, we know the right questions to ask before we suggest making an offer. How is the property priced? Is the listing agent an experienced Short Sale negotiator? Does the seller have a second or third mortgage? What bank holds the note? All these questions will play a huge role in the success of your Short Sale escrow. We know which Realtors are closing Short Sales and which are not. We understand the current legislation and how it plays a roll from the buyers perspective. We know which banks are easy to work with and motivated to negotiate, and which ones are not. We don't just throw out offers on your behalf and hope they stick 9 months later. The "doom and gloom" you hear about buying Short Sales can normally be avoided with competent Realtors and willing banks. There is a method to the Short Sale madness and we are experts at it. We do this every day for our clients and we would be happy to do it for you.
Simply put, a Short Sale is when a bank is willing to take less money for a property than what is currently owned on the property's loan or note. When a seller can no longer make their mortgage payments and wants to avoid foreclosure, another option is a Short Sale. The seller (normally with a realtor) puts the home for sale to solicit an offer. Once the sellers accept an offer from the buyer, then the offer is submitted to the bank for approval. This approval process can take several weeks if not months, and go through many counter offer and addendum phases until the bank and buyer are happy with all the terms of the contract. It is during this process that the two Realtors earn their money! They are in constant communication with each other and facilitating massive amounts of paperwork sending in contracts, forms, seller financial information, tax returns, financial summaries, market analysis, closing statements and a whole host of other documents (often several times), depending on the bank and competency of the bank assigned negotiator. If and when the buyers and sellers come to terms, the bank then issues its approval and acceptance. Then and only then does the real escrow process begin. At this point the escrow takes on many aspects of a traditional sale and both agents and parties work to get the escrow closed.
There can be several reasons why a seller would decide to do a Short Sale. There is Senate Bill 931 which aims to prevent banks from pursuing sellers on All first mortgages of residential dwellings (1-4 units) for deficiency judgements. There is the Federal Mortgage Debt Relief Act that expires at the end of 2012 that generally may allow federal exclusion on income realized as a result of a short sale or foreclosure in the event the bank issues the seller a 1099. Then there is the credit issue. Both a Short Sale and Foreclosure will more than likely affect the sellers credit. With that said, if a seller is proactive with a Short Sale, they may be able to successfully close a sale with fewer 30/60/90 day late penalties, thus lessening the impact on their credit and recovery time. Also in the typical Short Sale that has delinquencies, we are hearing about a 2-year recovery time to purchase a home again. The foreclosure situation can be 5-7 years to recover. For the seller in a Short Sale it can be a lot less stressful, as the Realtor takes on most the stress and frustration negotiating with the bank on behalf of the seller. The seller nor the buyer pays for any commissions to the Realtors. The Realtor fees are paid by the Bank. For these reasons, both sellers and banks are increasingly more motivated to try and do Short Sales. The result of these Short Sales, if approached correctly, can be some amazing deals not likely to be had until the next real estate cycle!
As Realtors, we cannot give legal or tax advice. The above opinions and statements are general rules of thumb and are subject to change. We, here at Merrill & Associates Real Estate, try and educate you with all the facts available and keep you informed to the best of our ability. Foreclosures and Short Sales can be very complicated. We ALWAYS recommend consulting an Attorney and Accountant to get legal and tax advice for your specific situation. We would be happy to recommend a local Attorney and CPA for you to speak with.