Since The PURTEE Team represents both buyers and sellers in this trying market, we see the frustration that can arise from a pending short sale transaction. So many banks and a variety of lending sources are back logged with the unprecedented number of foreclosures and pre-foreclosures. It is the pre-foreclosures, or 'short sales' that we are discussing today.If a property owner has found himself unable to keep up with his mortgage due to economic hardship, or is facing foreclosure, a short sale might be an answer to lessen the blow to his credit and decrease the debt owed on his mortgage. Just because the property has devalued and may now have a market value that is LESS than the mortgage balance not NOT mean that owner automatically qualifies for a short sale.
A property owner has paperwork to fill out (just like when he had to originally qualify for that loan) to literally justify that he can no longer afford to pay to live there. For owners simply wanting to "get out from under" on a certain property, a short sale takes on a different meaning. In this case, the owner takes the loss and has to make up any deficit or shortfall in his mortgage payoff when selling his property... resulting in the owner bringing cash to the closing table.
But let's take the owner who does qualify for a short sale... from Lender to Lender and Transaction to Transaction, the situation changes which can leave both Buyers and Sellers with a sense of frustration.
The various banks and lenders have stacks and stacks of pending transactions that would qualify as a short sale. This basically means that any bank approval of a short sale offer means a loss for the bank, obviously not something they are eager to do. In certain circumstances, the lender may negotiate a payoff with the owner to absorb a part of that shortfall. Here is where being involved in a short sale transaction requires a huge amount of patience. Even at that, things don't always go as planned. Earlier this year, we worked diligently with an owner to try to get a short sale through the lender. In this case, we represented both the buyer and seller. Our buyer had made a reasonable offer and we were trying to get it through the system. What we found was that files were closed without notifying us, negotiators changed and the rules for what they needed with them. The buyer actually increased his bid twice to what was outlined as the number the bank had to have. The first time went nowhere and the second took a full 4 weeks longer to get approved! Although it was grueling, the closing actually took place!
Another short sale had a full price all cash offer at $110,000 and the lender came back and said they needed $4000 more to close. The buyer refused to budge over the full asking price which was justified by the comparable market analysis. At this point, the buyer walked and the lender foreclosed on the property. Want to guess what happened??? The lender paid $45,000 to do the foreclosure and had to eventually bring the property back on the market at $25,000 less than the offer they had in hand!
In the last month, we represented a buyer who had a bid on a short sale property of $915,000 and waited 3 months to get an answer from the bank. He finally brought his offer up to $950,000 and stood firm. Unfortunately, the bank stood firm at $980,000 and wouldn't budge. Now the buyer has lost interest and moved on... leaving the poor owner and lender with no offer at all! Over $30,000. So the bank is facing foreclosing and the possibility of bringing it back on the market at an even lower price!
TIME OR MONEY? One of the great challenges we face is dealing with these lenders that are slow to respond and don't jump at a reasonable offer. Currently, we have several short sales that are in various stages of trying to get bank approval for a viable offer. Our advise to both buyers and sellers... if you don't have the patience to wait it out, don't bid on a short sale. However, if you do and succeed in getting the offer through, it is well worth the wait!
Learn More About Short Sales and Pre-Foreclosures In The Tampa Bay Area
No comments:
Post a Comment