Short Sales
Short sales are prolonged and unsure processes. For this reason, if you have the patience, they can be a good deal. On the other side, if you wait 9 months for the short sale to get approved and it doesn't, you don't know whether the market will be better or worse off than when you started. That's a risk and that's why short sales are not always the best choice for everyone. Obama is putting some guidelines in place to make the process more consistent and he´s putting incentives on the loan servicers to make the short sale happen. Slowly, we are beginning to see progress and lenders are starting to move more quickly in the short sale transaction.
Approved Short Sales
When I look at short sales, I pide them into 2 categories: approved and unapproved short sales. Approved short sales, have rec´d lender approval for the price they are listed at. (Unapproved short sales may be listed at a price the lender would never accept!!) An approved short sale indicates the lender is ready, willing to make a short sale, and will accept the price listed!
Strategy for an approved short sale: Move quickly and sound offer based on comps and the fact that there is risk involved.. Write a clean offer without asking much back from the seller.
Unapproved Short Sales
If the short sale is not advertising that they are approved, believe me, they are not. Once they come on the market, these unapproved short sales typically take 60-90 days to get approved by the lender. Then they may close escrow 30 days later. So typically the entire process takes 4+ months from start to finish.
So if you are looking at condos, check out the DOM, or Days on Market. If it has been on the market for a short time, it´s most likely you have plenty of time to get an offer in, unlike a bank-owned property. If it has been on the market more than 4 or 5 months, then there may be an issue with the short sale and getting lender approval. Listing agents for short sales manage the process differently. So, each sale needs to be checked.
The listing agent will usually submit the first offer they receive to the bank along with the seller´s short sale package to get the short sale process started. Since the property stays on the market until a short sale is approved, the listing agent will continue to field offers. It is typical for a short sale to have multiple offers since it is on the market for such a long time.
Many buyers drop off by the time the bank approves the short sale and the buyers that are willing to be patient end up getting the property.
Once the sellers receive bank approval on the short sale, I will be notified to talk to you about submitting our highest and best offer. These updated offers will then be presented to the seller and they will decide which offer to accept.
It is very difficult for me to tell you how many offers they have or what they are offering. I try to get as much info as possible; but quite frankly, these agents get overwhelmed with offers and they don´t have time to field these kinds of questions.
Strategy for unapproved short sales: Make it enticing enough to get a response, but you will most likely have a second shot at it, and may have more information about its value later.
Bank-Owned/REO
If a home has not sold in a short sale or an auction, then it becomes owned by the bank. The biggest misconception people have about REO´s is that they are priced better than the other options and that they are priced low, or at the right price. If they are priced lower this is usually because the property is run down and it will take money to bring it up to market value.
REO´s that are priced right and don´t have some significant issue for a sale, usually go very fast. If you plan to buy an REO, be ready. Have your lender approval in place and give me all the information to write an offer, so when you see an REO that you like, we can get an offer out that day. In fact, the minute the listing comes on the market and if you are interested, please notify me immediately. Time is of the essence. And, expect that an REO sale will require you to go through an approval process with their own lender, even if you have your own.
REO´s are not always priced right. So, have me due the due diligence on the deal and look at the comps.
Strategy for an REO offer: Move quickly and make your highest and best offer. Write a clean offer without asking much back from the seller.*
Regular Sale
These are the few and welcomed sales from owners that have enough equity to offer a regular sale. I think they are the best on the market. Why? Because they have to compete with the short sales and REO´s, so the price is right. And generally, they are in better condition than the others. Also, you can expect that you might get some repairs taken care of, which you would most likely not get in an REO or a short sale.
These are simple.
Strategy for a regular sale: Same as the REO´s and approved short sales - move quickly and make a strong offer. You will likely be countered and have an opportunity to meet it, if you can.*
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