Short Sales
When the fair market price for a home is less than the outstanding mortgages attached to the home, someone is going to get "shorted." That would be the lenders involved on the home loans. If you are planning to take advantage of the opportunities involved with "Short Sales," you have to understand the nature of the sale.
Most loans are either sold or backed by another entity. This might be a government entity like Fanny Mae or Freddie Mack, or it could be an investor. This complication is important because a home's lien cannot be "shorted" without the permission of all lenders holding mortgages. What that means to the buyer is that the negotiation process if much more complicated than simply negotiating with the homeowner. Once the buyer and the home owner agree to a price, presumably lower than the amount necessary to satisfy all lenders and costs of closing, negotiations must begin with the various lenders.
Here's a typical scenario:
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Buyer and seller agree to a fair market price based on other home sales and the condition of the home in question. A contract is signed.
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The selling agent gathers all of the financial information required as well as other documents required by the different lenders. This forms the "package." This may be done by the listing agent or a professional negotiator. (Oh, by the way, if a profession agent is used to negotiate, the seller doesn't have any money, right? Guess who pays the 2-5% negotiating fee on top of the purchase price! Sometimes the negotiator will be able to get the lenders to pay that fee, but not always.
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Once the 100 - 200 pages of financials, agreements, etc., are submitted to the lenders, the real process begins. You the buyer must expect to wait for from six to nine months for this process to work its way through the negotiator and lenders. It is never is fast process.
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The buyer has GREAT PATIENCE and waits for 7 or 8 months and finally gets an answer. The lenders insist that to agree to the deal, that will require $xx,xxx.00 more from someone. They've already tried every source they can to scrape off more $$ and they still want to minimize their losses. The general thought is that they will loose even more if they have to foreclose. Unfortunately, they have already used a computer program to determine that they will not loose more. History doesn't agree with them but the buyer is stuck with a decision to make. Walk away after 7-8 months or pay another $10 or $20k.
Less than 40% of short sale initial contracts result in a sale.
My buyers result in much higher percentages because of my short sale buying strategies.
Buying a short sale isn't easy: it takes the kind of experience I have. If you don't know what you are doing you can get yourself, your money, and your credit tied up.
Whether you are an investor, a first time home buyer or just ready for a change, contact us today at 727-459-5460 and get the experience you need saving you time and frustration.
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My foreclosed and short sale homes sell extremely quickly!
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