If you are looking to purchase a home you will at some point fall in love with a shortsale. Shortsales are a bit like a “bad boy/girl.” You know you should not be with them but sometimes you just can’t resist. Generally priced below the market they can be extremely tantalizing. If you do find “you just can’t resist” below are some questions you should ask so that you do not regret your decision later.
1) Does this property have prior short sale approval? If it does that is great news because it means the bank has already approved the sale once which means they may approve it again with you quicker. Buyers get tired of waiting for shortsales all the time and drop out. Inevitably 2 days later shortsale approval is issued and that is where you come in. You cannot just take over the approval. It is a process but certainly a faster process than starting from scratch.
2) How much do they owe? If the seller owes $700,000 and is selling it for $300,000 good luck. However if the seller only owes $325,000 that is good. It is easier for a bank to agree to taking a smaller hit. Less management gets involved.
3) Which bank is the loans with? Wachoivia is known for being super easy and fast to work with. Some of the other banks are a bit tougher to get to agree to a shortsale. Ask your Realtor what they think the odds are.
4) Are there tenants and when will they be evicted? Check out yesterday’s article as to why this is so important.
5) How many loans are there and who are they with? The more loans with various banks the longer it takes basically because more negotiating needs to be done. Often the 1st and 2nd lien holders (mortgages) make it impossible if they cannot agree with each other on the terms. The 1st will often short what the 2nd will get and the 2nd sometimes will not agree to that.
6) How many shortsales has the listing agent done? There are Realtors in the SF bay area that do nothing but shortsales all day long. They have worked with every bank and know the drill and sometimes have relationships at the banks. If the listing Realtor is a shortsale guru that is a good sign. It does not guarantee that it will go through but it does push the odds up.
7) Has a notice of default been filed…when? A notice of default basically means the bank is gearing up to foreclose. If the seller only became interested in selling via a shortsale after the notice of default had been filed you may have a staller. Be cautious. If you are nervous that you may be dealing with a staller once the seller accepts your contract have your agent ask to see if you can come in and check on the house with them there of course. Perhaps a once a month visit. If they do not want to do this beware. Any normal, nice person selling there home would let the patient buyer check out the home once a month.
Tip:
1) Have your lender pull a property profile. This will have who has been on title for the property. Your lender needs to check to make sure that the seller you are buying it from is in fact on title. With a normal transaction this is handled in the first few days however with a shortsale there is a lot of waiting before anything gets done and surprises after 7 months of waiting are not good. They should also look for recent title changes. There are scams taking title away from homeowners and selling the properties out from under them and your lender needs to be on the lookout.
Questions/comments Jready@mmcdcorp.com www.ReadyBell.com
- 15 Year Fixed Mortgage Rate History in Charts
- 3 Reasons this is the ultimate buyers market
- 5 2011 Predictions; Crystal Ball edition
- 5 Quick Credit Tips
- 5 Year ARM Mortgage Rate History in Charts
has written 199 articles on Ready Bell Home Loans @ Mason McDuffie Mortgage
