I’ve written extensively about short sales and what you need to know about short sales in the past few months….
Important information about Buying a Short Sale - How to make an offer and get it accepted on a Short Sale or Short Pay in California
May 4, 2008 · 1 Comment
It is Important that you Understand what is happening on the other side of a short sale or short pay when you are considering making an offer on a home in this situation.
Read This First - And then come back and finish this article.
Ok, welcome back. I want to give you a perspective on buying short sales and short pays that will give you more control of the transaction. Short Sales and Short pays are becoming more and more common in this real estate market and my best guess is that over 70% of what you are finding when you search for homes are either short pay / short sales or foreclosure / REO homes.
The seller and seller’s real estate agent are an important part of the short sale process. The number one thing i hear from “agents” is that the bank foreclosed on the home without notice. I understand that there are some banks/lenders that are not cooperative and difficult to work with and I also believe that many times that is a self induced “difficulty” due to a lack of understanding of the process.
How much should you offer on a short sale?
April 27, 2008 · No Comments
There are always questions about what to offer when making an offer on a short sale or a foreclosure property. There is no right answer to this question - you can make any offer you like. The real question is - Do you really want your offer accepted?
Because Short Sales and Foreclosures are so radically different in how you approach them, we will only address short sales here. Here is a quick overview of how Short Sales and Foreclosures are different.
Before a short sale offer is considered a value appraisal is completed called a Broker Price Opinion, or BPO. This is an assessment by a Real Estate Broker as to what the current value of the property is. A BPO is a “general idea” of the value based on recent sales in the area. The bank will complete a BPO before considering your offer on a short sale - and before listing an REO or Bank Owned.
What you should know about buying Short Sale Homes in California
April 23, 2008 · 2 Comments
It seems lately that most properties listed for sale are short sales (short pays) or foreclosures. There is a very big difference between these two types of purchases and how you approach making an offer to buy one of these homes. Today’s post is about Short Sales - I will follow this up with Foreclosures in the next day or two.Short Sales (Short Pay) - I have this conversation on a daily basis with potential home buyers looking for a great deal. Usually it’s a call or an email that goes something like this:
“Can this be true? There must be something really wrong with this property because this seems like it’s priced way too low”
The old addage that “if it sounds too good to be true, it probably is” is quite relevant in many of these cases. It’s not that it’s too good to be true, in many cases it’s simply a matter of trying to attract attention to the property.
There’s a whole new opportunity around the short sale phenomenon that beginning to occur much more often. In all of my other explanations the one thing that is still consistent is the amount of time it is taking the lenders to process a short sale.
The quickest I’ve seen a short sale processed is 60 days, the longest was 6 months! Let’s now discuss a scenario on an offer submitted on a short sale. For the purposes of this example, and to introduce the latest opportunity for buying a short sale, we are going to assume that the Agent making the offer has educated the buyer and a fair offer is made of approximately 10%-15% below current market value.
Here’s the scenario and the opportunity -
- An Agent for a buyer makes an offer on a short. This is an educated and experienced Agent so the offer is realistic and stands a very good chance of being viewed as a win/win for the bank and the buyer.
- The bank, in it’s normal fashion of processing short sale requests takes the next 30 days to register the offer and put it in line to be assigned to a loss mitigation specialist.
- Once the offer is assigned to a loss mitigation specialist, it sits in their work pipeline for another 30 days….60 days have now gone by.
- The buyer has since continued looking at homes with their agent and has made other offers on equivalent homes at similar prices (because they made a realistic offer) and they soon find even better deals on bank owned properties priced to sell.
- The bank finally gets to the short sale offer submitted by our interested buyer over 60 days ago.
- The bank orders a BPO (Broker Price Opinion) to determine the “Market Value” of the home.
- It has now been 90+ days and the bank either approves the offer they have received or makes a counter offer for a sales price that they believe more accurately reflects current market conditions.
I did a search in the city of Riverside for short sales under $300,000. There are 308 listings….about 26 homes into this list I find my first “Pre-Approved” Short Sale -
- 9505 Arlington Ave - “approved!!! NO WAITING LINE!! JUST SEND AN OFFER $120K GET’S IT”
Awesome! Lets keep looking and see what kind of deals there are out there……Ok, here we go - after scrolling through another 47 listings we have a winner!
- 3719 Kansas Ave - “Short Sale Approved at $155,000!!!!! Please call with any questions”
Your Real Estate Agent Needs to Help find pre-approved short sale listings. You’re saying to your self, that’s pretty good right? 2 Pre-Approved Short Sales out of about 75 ot 100 listings? over 300 short sales in the city of Riverside? That’s not a bad selection……But here’s the catch. This information is not seen by the public.
Many of the 300 listings I found didn’t even mention that the home was a short sale in the remarks that the public can read! This information is buried in the “Private Remarks” that only Realtors are allowed to read.
Buying Short Sales is still a very hard way to find a deal and more often than not end up not being a “deal” at all. I am going to stick to my guns and recommend that you work with a Realtor that understands this market and knows how to find you a deal. More often than not, you will find this “experienced” agent showing you bank owned foreclosure properties.
For more information on buying bank owned properties and short sales, or if you would like a referral of an “experienced” agent to help you find a great deal - feel free to drop me an email or a phone call.
You can reach me anytime on my cell phone at 714-336-8286 or you can reach any of these ways:
Email: Scott@myporchlight.com
AOL, Yahoo, Skype: PorchLightScott
