In this market, I find myself closing more and more short sales, which are basically when the bank allows a homeowner to sell the property for less than what is owed on the mortgage. I’m sure you’ve heard all the different horror stories: “It took a year to get an answer from the bank!” “The bank wanted more than the house was listed!” “After waiting for several months, the bank finally approved the sale and then said we had to close in 5 days. It was impossible!” The list goes on and on. How do you take that horror story and turn it into an opportunity?
Get help. Banks prefer to speak to an intermediary (A Realtor, attorney, etc.) vs. the actual homeowner due to a level of perceived trust. The homeowner is viewed as the enemy, so make sure you find a Realtor who can guide you with the facts and expectations of what will be involved. Although there’s no crystal ball, they should know some simple questions: How many banks are involved? When was the process started? Have any offers been submitted? How long do you think before approval? If they can’t answer those questions, you need to run!
Be patient. After you sign a contract to buy, you basically sit and wait. This is due to privacy laws which state that a buyer can’t speak to a seller’s bank. The key ingredient is making sure the Realtor that lists the home is savvy with this process, so make sure your Realtor qualifies the listing agent before wasting your time.
Give them a chance. A lot of Realtors won’t even show short sales because of the bad name they have been given. This is definitely a problem that you have to overcome if you are a seller. If your house is priced right and is a short sale, your neighbor’s house, if similar in characteristics and price, will tend to sell first – simply because people don’t want to wait and deal with the uncertainties of the short sale process. Positive media coverage and changed perceptions will help change this.
Let’s forget about the horror stories and look at the facts for SW Florida: we have seen an increase of 58% for closed short sales from the beginning of 2010 until present day verses the same time frame in 2009. (1154 closed short sales in 2009; 1826 closed short sales in 2010 according to Sunshine MLS). That’s significant!
Short sales are here to stay, so embrace this changing market. Often times you can get the best prices on short sales and the home is typically well cared for and left in good condition, unlike most foreclosures. If you’re a buyer, make an offer and be patient; if you’re a seller don’t give up hope