When purchasing a short sale patience is the order of the day.
You will be negotiating with a seller who is looking to get out from under their mortgage with their lenders approval. The trap sometimes is the seller has no motivation to negotiate a higher price. At first glance it seems being able to purchase a home for a better price is a good deal. The problem comes in when the lender obtains one are more market analysis which is higher than the contract price. This process can take several months for you to receive an answer from the seller’s lender. Understand, the seller’s lender is not involved in pricing and only begins to look at the short sale when the seller delivers a contract. In this scenario, even a full price offer may not garner an approval of the deal.
In many cases short sales will not be approved for reasons that have nothing to do with market value. A lender may determine that their bottom line may be better served by going through the foreclosure process and collecting various Mortgage Insurance funds available in a default situation. A short sale is considered a negotiated settlement and not the default when it comes to credit default swaps. There is no way to know up front because many times the lenders won’t say why they won’t approve the sale. They may counter the contract higher than any reasonable buyer would pay essentially killing the deal.
There is no sense in getting upset with the seller if the short sale not be approved. Banks will not look at any short sale proposition without a signed contract. Generally, the Sellers will have already ruined their credit by being 90 days late or more which is another condition of being considered for short sale. They also have to provide a hardship letter, tax returns, a financial statement, and other supporting documentation with your contract just to be considered.
Finding the best short sale property the sometimes a daunting task. Many will have a lot of deferred maintenance and have not been well taken care of. After all, put yourself in the sellers’ shoes. If you poured your life into a home only to come the realization you can’t get out without ruining your credit, you might not make the home a priority. We find short sales that state “pre-approved” are listings that have been put under contract in either the buyer gave up for the bank wanted more money than the buyer was willing to pay. If the price is in line with the market it may be an opportunity right when the house is coming back “active.” Sellers who have employed an attorney that specializes in short sales might also be a better place look. There are also a lot of agents who are having a reasonable success getting these approved. There is a lot of follow-up required to get the timely response from a bank. There is no surefire way a of getting a short sale approved. If you find the home that you just “gotta have”, we can quickly determine our odds of being the one in five short sales that ever get approved.
The statistics in Sarasota are about 62% of all the homes under contract are short sales but make up less than 20% of the total sales over the past 12 months. Nearly two-thirds of all sales are just “normal” sales without any lender approval needed from the seller’s side.
We are here to help regardless of your being a short sale, foreclosure or just a home someone wants to sell. Our local expertise can help make you home buying process as stress free as possible.