Have you ever thought about short sales as a way of buying or selling your home? In this post as a short sale expert I would love to explain to you the process of how short sales work. Right now short sale properties are in extremely high demand due to historically low interests rates to the point where there are almost always multiple offers in every single sale. It pays to have an aggressive agent who knows how to get your offer accepted and we at The Batchelor Group can make that happen for you.
Pricing a Short Sale Home
One of the first things to realize when you see a property listed is that the list price has oftentimes not been set by the bank. What you see in that case is a list price that has been set by the seller and their listing agent. So it is important to think of that price as a starting bid as the bank may not be willing to accept an offer at that price or sometimes an even higher. If you are financing, that offer will still be subject to appraisal, so it’s okay if you need to offer a little bit above the asking price because if the home does not appraise, the majority of time you will not be responsible as the buyer for the difference for the appraised value. This is an advantage over a traditional sale such as a flipped property or an equity sale where the buyer may be expected to pay the difference between the offer price and the appraised value. Again, this doesn’t happen most of the time in short sales, and as experts in the short sale process we at The Batchelor Group are going to fight for you in that expect.
The Short Sale Negotiation Process
What happens next in the process is the buyer will make an offer and the seller can either accept or reject the offer. If the seller accepts the offer, then they are going to negotiate with the bank on the final sale price. Keep in mind during this time that there may be a counteroffer that comes from the seller’s bank which can be met with a counter offer back from the buyer. This process can go on for a while and it is important to have a knowledge agent to help you with expediting the process. We can dispute a value, and we can even dispute an appraised value if need be to get you the best offer accepted on that home.
Also, during this negotiation phase there are often times other issues that must be dealt with such as liens that sometimes the seller is either not willing or unable to pay. These liens can be taxes, HOA, sewer, trash, or other liabilities that have to be part of the negotiating process. What an experienced agent would do in that case is to pull what is called a “prelim” on the property and see what is recorded on the title from the time we get your offer accepted. This will give us an idea of what sort of liens are on file, and at that point negotiation with the seller can begin on what can be done with those liens in closing the sale. This process can take a while, sometimes six to nine months, and the liens will continue to grow over that time. However, if the market is going up the buyer can actually gain equity in the property that will sometimes more than make up for the difference. We have had buyers who have held a short sale property for less than six months and sold with equity.
Dealing with Sellers
Another issue that sometimes must be addressed is the removal of items by the seller out of the home. Sometime the seller with remove items you would consider part of the property such as ceiling fans or a barbeque. If this happens, you can either buy them separately or simply allow them to be removed from the home. What we at Batchelor Group would do in that case is to negotiate with seller up front so that there are no surprises and the buyer knows exactly what to expect at closing.
Streamlining the Short Sale Process
Finally, it is important to realize that short sales are three-way negotiation process between the seller, the buyer, and the bank. There are no guarantees that the sale with go through even if the seller and buyer come to an agreed upon price, and short sales do come with some degree of risk. However, withed skilled agents like the ones at The Batchelor Group the process can be streamlined and the negotiating process made as amicable to all parties as possible. It really pays to have an advocate on your side who can help you mitigate risk, and have you 100% comfortable with your home purchase. No matter where your property is located at, whatever city you are looking at in the United States, let our experienced agents help. Feel free to call our office, day or night to assist you in making your short sale buying experience a simplified and stress-free process.
Key Points To Remember:
- Short sale pricing is a process of negotiation with the seller and then the bank.
- Liens must be considered as part of the negotiation process.
- Seller expectations must be understood up front so that there are no surprises.
- Experienced agents such as those at the Batchelor Group can help in this negotiation process to make sure you get the best deal possible