Short sales are a natural outgrowth of the recession we have been living through. People have lost jobs or become ill at the same time as the equity in their homes has been eroding. They have fallen behind in their payment or payments, yet even when they make the intelligent decision to cut their losses and sell, their net proceeds will not permit them to pay the mortgages in full.<\/p>\n
Initially, banks and other lenders did not show muc sympathy to people in this kind of quagmire. In the last few years, however, even the most rigid of lenders have realized that “short sales” ,so-called, represent a cheaper alternative than foreclosure in almost all circumstances. Therefore, short sales have achieved a level of acceptance which make them an option every time a homeowner is behind ih his or her mortgage(s).<\/p>\n
I have had considerable experience in dealing with short sales, and I would offer the following advice to those of you, who become involved either as selling agents or buyer’s brokers in short sales:<\/p>\n
1. Do your Homework. Obtain as much information from, and about, your Seller. You need to know not only about first mortgages, but second and sometimes third mortgages as well. Make the listing agent furnish current statements from the mortgage lenders, if you can. Ask a friendly real estate attorney to do a “current owner” search of the property. I do them all the time from my computer. Normally, they will provide excellent information on what mortgages are outstanding.<\/p>\n
2.\u00a0 Work out the possibilities of Resolution Before You get in too deep. When there are second and third mortgages, the problems escalate rapidly. If these junior positions are not getting something out of the short sale, they may balk.\u00a0 Make sure the Seller has addressed this issue with the first mortgage holder. A lot of time will be wasted if the junior lienors will not move.<\/p>\n
3. Taxes and Other Municipal Liens. In many instances, when the mortgage has not been paid, neither have the taxes and water and sewer. You will be dealing with a Seller who has no money. In certain circumsatnces, you may resolve the mortage liability but the unpaid munipal charges will make the deal not feasible for your Buyer.<\/p>\n
4.\u00a0 Common Area Fees. The same criteria which make munipcipal charges a problem can also be a problem with common area fees for a Condominium Unit purchase as a short sale. The Trustees of a Massachusetts Condominium have the power to foreclose on outstanding common area fees and sell the Unit at auction. Many Condominium Trustees are unaware of this power or unwilling to spend the time and effort to make these sales happen. Despite their sloth, the lien for common area fees still exists. Know the amount of the arrearages, and see what might be done to compromise same, so that future payments can be applied to the future, not past due arrearages.<\/p>\n
5. Short Sale Documentation. Nothing short of an executed letter from the lender or lender is acceptable to confirm a short sale agreement. Accept no substitutes!!! Have the closing agent confirm the validity and accuracy\u00a0of the executed letter before a closing is scheduled.<\/p>\n
6. Offer and Purchase and Sale Provisions. A realtor I respect has told me she insists on the following approach, and\u00a0language, when she is working with a short sale Buyer:<\/p>\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 a. She will put down no more than $100.00, with the Offer to Purchase or Purchase and Sale Agreement.<\/p>\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0b. The balance of the Buyer’s deposit will be due only upon receipt of lender written approval(s), which has\/have been verified as duly authorized by the closing agent.<\/p>\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 c.\u00a0 The period of inspection will commence only after receipt of the approval(s) described above.<\/p>\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 d. The Buyer’s financing contingency date shall be twenty (20) days after receipt of approvals(s). The Buyer’s financing application date shall be three (3) business days after receipt of such approval(s).<\/p>\n
If the steps outlined above are taken, realtors can save themselves, and their Buyers, a lot of wasted effort and expense. There is nothing worse than having the belief that a short sale transaction is going through, only to find out that the proper authorizations have not been obtained from all people who have liens on the property, and a sale transaction which many people have worked hard to make happen, will fail. See my blog: www.realtorsresourceblog.com<\/a> for other areas of interest<\/p>\n","protected":false},"excerpt":{"rendered":" Short sales are a natural outgrowth of the recession we have been living through. People have lost jobs or become ill at the same time as the equity in their homes has been eroding. They have fallen behind in their payment or payments, yet even when they make the intelligent decision to cut their losses … Continue reading Short Sales and You<\/span>