Seven Oaks Bargain

To Rent…or Buy?

As your lease nears expiration it is worthwhile to consider your next move…to continue renting a place to live or explore buying a home.  If you are not sure of the benefits of purchasing a home, take a look at our short video…then give me a call for a detailed discussion about your specific benefits.

5 Things You Have To Know About Short Sales

Once again I am in the midst of coordinating a short sale and, frankly, it is a challenge for all involved.  First, let me do a brief review of the definition of a short sale and then some recommendations for participating successfully in one of these transactions.

A short sale, for those who may be a little fuzzy on that, occurs when a lender agrees to accept less than the amount owed on a mortgage to release the current owner from the obligation as the ownership in the property transfers to another buyer.  For clarity, let’s look at a brief example:

If the current owner of a property owes the bank $100,000 and can not make the required payments on that loan, the bank may accept a lesser amount, in full, to cut their losses.  If we can find a buyer who will pay, say, $90,000 for the property, it is likely that the mortgage holder will accept that amount as pay off and call it “even”.

In this situation a buyer can purchase a home at a very good price and come out of the transaction with some built in equity.  However, all parties in the transaction will have to work a bit harder than they would to complete a standard real estate transaction.  Here are some things everyone should know before committing to a short sale transaction.

1.  Short sale transactions take a long time to bring together…three or four months is not unusual.  The majority of time spent coordinating a short sale is usually in communicating with the lender, submitting various documents to the lender beaurocracy, lengthy review times, redundant submission of paperwork and kickback of documents for seemingly minor issues.  All parties need to remember that the bank is in control of the transaction and ALL of their requirements must be satisfied if the transaction is to be successful.

2.  Once approved, short sale transactions close very quickly.  Typically, the buyer and seller and real estate agents will wait and wonder for days, weeks, and months about whether the bank is going to approve the sale.  Then, word of approval will come with the requirement to close within 10 days.  So, the buyer can not be waiting for that approval before they start getting ready to close but must prepare to close despite the unsure situation.  The purchase funds need to be ready, settlement documents begun and title search completed, and all closing tasks taken care of to respond to the bank’s requirements.

3.  Banks like to see lots of cash.  I guess that is the nature of banking, but the successful short sale offer is usually one that brings 10, 20, or even 100% cash.  This is because, after all of the work that the bank does to process their side of the transaction, they do not want the transaction falling through because of a problem with the buyer’s funding.  The reason lenders are in the situation they are is because they were too lenient in lending.  Now the pendulum has swung to the other extreme and their conservative evaluations often require hard dollars.  If you want to save money buying a short sale property, bring as much cash to the table as you can.

4.  Be prepared to expose your most detailed financial information.  I guess that since the mortgage holder is in control of the transaction, they feel deserving of seeing any documents that they wish to see.  These exhibits may include hardship letters, bank statements, explanations of where funds came from, tax returns, and more.  Be prepared to share your “personal” information or look elsewhere for a home.

5.  Banks negotiate!  As a buyer, there is no harm in presenting a low offer and as a seller there is no danger in accepting same.  Ultimately the bank will determine the selling price through negotiation with the buyer.

Buying or selling a home in a short sale can benefit everyone involved in the transaction but noone should go into the exchange without knowing what will be expected of them…and what they should expect.  The most important thing for either party to know is…have a REALTOR on your side who can guide you through the process.

With this information in mind, would you consider buying a short sale property?

Can I have a REALTOR and buy a FSBO too?

The owner of a FSBO is hoping to save money by marketing his/her own home. Certainly, that is fine. Their odds of succeeding, though, are slim. Statistics say that about 80% of FSBOs end up in the hands of a real estate agent.

Read more...

Our Real Estate Blog

With over 35 years of combined experience selling real estate it seems time to begin sharing all of our accumulated information with the world.

We’ve been involved with just about every type of real estate transaction…

• New Construction
• Condominium and Planned Community Purchases and Sales
• Bank owned (foreclosed) Properties with both buyers and sellers
• Short Sale Properties with both buyers and sellers
• Clients relocating into and out of the area
• Buying and Selling of Acreages
• Buying and Selling of Multi-Unit Properties
• Investment Properties (We’ve even flipped a couple ourselves)
• Cash purchases
• All types of financing situations

The list could go on, but you probably get the point.  So, over the next few months, we are intent on sharing insight into the pressing issues in today’s real estate market.

I look forward to reading your comments to our posts and answering any questions you might have.