Short Pay Properties & What You Need To Know About ThemAs you search for homes online, you are going to come across listings that are priced far below market value. 99% of the time these will be "short sale" properties. While the following article explains what a short sale is, you need to understand the differences between them.
There are two types of short sale properties. Those that have been approved and those that have not. Its a huge difference.
An "approved short sale" is a property where the bank has already agreed to take less than what is owed. These properties are typically priced at or close to market value.
Then there are the hundreds if not thousands of listings in the MLS that are not approved or "subject to lender approval". These properties are unscrupulousy listed by agents far below market value in an attempt to lure in potential buyers with a low, "to-good-to-be-true" price.
These properties have not been approved by the lender to take less than what is owed, official Broker Price Opinions (BPO's) or appraisals have not been requested or performed and in most cases are not legitimate short sales based on a true hardship scenario.
Many people are under the impression that all short sale properties can be bought at steep discount prices. This is simply not true. A truly approved short sale property which has already undergone the appraisal process or BPO process has been listed on the market at very close to market value. The bank simply is not going to take much less because they don't have to. Would you?
So, if you come across a property that is listed as a short sale, call your real estate professional (Ron Taibi @ 661-212-1135) and ask him to verify the information. Is it approved or is it not. That is the question to be answered. If it is approved, chances are you can still get a great deal.
One last bit of info, when banks or lenders have actually approved a short sale, they don't jump on the first offer that comes in. They may for several offers, then wait until the foreclosure process is close, and then review the offers they have to see if they have a suitable one or may just look at the highest offer and work with that one.
In many cases, the banks and lenders are looking for the most qualified buyer who is closest to the asking price. The last thing they want is buyer who can't perform. | Short Sales or Short Payoffs Explained
A short sale is a legally-binding agreement to allow a home to be sold for less than the amount that is owed. For debt-ridden homeowners or those who owe more than the house is currently worth, a short sale could save them some of the enormous pain, embarrassment, and major credit challenges associated with bankruptcy and/or foreclosure. For lenders, it helps avoid some of the hassle and expense of seizing and auctioning off delinquent real estate.
It's important to note that short sales occur at the sole discretion of the existing lender or servicing company. This is not like negotiating the price of a home under normal circumstances. A written declaration and supporting documentation demonstrating financial hardship and an inability to make payments will definitely be required by the lender in order to even consider a short sale. This may include pay stubs, tax returns, and liquid asset statements – including those for retirement accounts – among other documentation. In addition, the borrower must be at least 91–days delinquent before a lender will even discuss a short sale.
This is where an experienced real estate professional becomes invaluable to your cause. Knowledgeable real estate agents have likely negotiated short sales in the past and are well-versed in the substantial risk and reward involved in this extremely complex and often drawn out process. | | |
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