Are you a buyer looking to purchase a short sale ?
It seems that there is a significant amount of confusion when it comes to purchasing a short sale. There are many misconceptions when it comes to this type of transaction, so below I have provided some information to potential buyers of short sales. If you are looking to purchase a short sale, understand that it is not the same as a normal sale and the approach is very different. There could be several parties involved and issues that are unknown to the buyer and buyer’s agent that can affect the transaction. If you are looking to purchase a short sale here is some helpful information.
1. On average, to get a short sale approval, it can take 60-90 days.
There could be mortgage insurance and an end investor on the loan as well as the servicer, which means it has to go through three different processes. Bank of America could be the servicer on the loan but they do not actually own the loan, so, the short sale has to pass their guidelines, then go to the mortgage insurer if there is one, then to the end investor like Fannie Mae and Freddie Mac. If you are a buyer and can’t wait at least 60-90 days for an approval and then another 30 days to go to closing, then you need to look at other houses. The worst thing you can do is tie up a house that is in a short sale with no intention of being patient while waiting for a short sale approval. Approvals can come sooner than 60 days, but industry standard is at least 60 days to get an approval or denial.
2. There is a general assumption that you can purchase a short sale for 40-50% under its listed price. In a short sale the bank comes out and does a valuation of the property and will expect a slight discount, but will not accept a huge amount under the market value.
Hopefully, if the agent who is handling the sale is experienced, they will have already gotten an approved list price from the bank by the time you are interested in making an offer. The bank will usually be willing to negotiate on that price, but will not, in almost every case, take 40-50% off of that price. To that point, you may be able to get a reasonable deal on a short sale, though it will not be, in most cases, as much of a deal as you may be able to get on an REO (foreclosed property). Also to that point, most short sales will be in better condition than an REO. When you look at the potential repairs a comparable REO needs and the time and expense it can take to do those improvements vs. a short sale being sold at a slight market discount with improvements already made, the investment could even out. There are REO properties that can be picked up for a huge discount, but require massive repairs that a comparable short sale may not require.
3. Short sales are a very difficult process and it takes a qualified person to handle this type of transaction.
With this type of transaction it takes a very experienced agent on the listing side as well as the buying side. Make sure before you move forward on the transaction that the listing agent has ample experience dealing with these types of transactions, or you could be tied up in a contract for months that never goes to settlement. There are several different types of short sale processes and each bank’s process is somewhat different; it takes a professional who has had experience with all of these different types of short sales to help facilitate a successful transaction.
4. In most short sale transactions the properties are sold “as-is” and no repairs will be made.
Although there are some exceptions to this rule, speaking in general, short sales are sold “as-is” and no repairs will be made even if they are found during a home inspection. In most short sale transactions the bank will require both the buyer and the seller to sign an addendum that states the property is being sold “As-is” and no repairs will be made.
These are just a few short pointers for buyers who are looking to purchase a short sale as they are a reality in every market, and if you have the patience you may be able to get the home you are looking for at a discount!
The good news is we see the light at the end of the tunnel and it’s not a train coming at us anymore. Mortgage rates are still very low and are expected to stay low throughout 2012. Over the past 5 years we’ve seen prices dropping and home owners wondering if they made a wise investment. In Oconee County, average home prices have dropped 12% and Pickens County has dropped 5% since 2007, which doesn’t sound like a lot given that places elsewhere are 25-35% less. There were 45 homes in foreclosures in Seneca this year that sold and 16 are still active. In Clemson/Central area 16 homes were sold as foreclosures and 6 are still for sale. 
%20005.jpg)
%20002.jpg)
.jpg)
To sell your home in today's market there are a few things you'll need to do to get it ready. But, the good news it doesn't have to cost a lot of money. There are some small improvements that you can do that will pay off big. Typically, Realtors advise homeowners to do as little as possible - perform touch-ups on floor tiling instead of replacing the entire floor; shampoo the carpets instead of replacing them. However, if the homeowner and their real estate agent determine that the condition of certain areas is deemed to be too poor, more extensive work may provide the greatest benefit.
