Hayes Realty Group

John J Hayes Always stay on "PAR" with your real estate needs Serving Sacramento, Folsom, El Dorado Hills, El Dorado County      Tuesday December 12th, 2017

Contact John 530-306-3316

Buying a Folsom/El Dorado Hills Short Sale Home FQ&A

1-How long does a short sale take?

It could take 2 months—6 months..Could be even longer if the seller is not cooperative with the lenders Requests.

Why do I need a buyer’s agent to purchase a short sale?

In a nut shell, working with a qualified buyer’s agent will help your chances of a acceptance of your offer. Working directly with the seller’s agent on a short sale in my opinion is a conflict of interest. The Seller’s agent needs to negotiate directly with the bank on behalf of the seller. If they are representing both sides of the deal, seller and buyer. When an agent is negotiating a short sale with the bank, they need to be representing the seller’s best interest. As a transaction broker, they should be neutral through out the transaction which means they can not advise either the seller or the buyer making it difficult for all parties of the transaction. Plus bank will only work with agents NO PRIVATE Parties.

What should I look for in an agent to help me purchase a short sale?

You want an agent that understands the process and is not afraid to challenge the seller’s agent. Ideally one that is certified to work with distressed properties. The Certified Distressed Property Expert or CDPE. CDPE agents are trained to work closely with the lender on the seller’s behalf to help preserve the seller’s credit. When buyer’s agents hold the designation, they understand the process and are not afraid to ask the tough questions.

What is the process for purchasing a short sale.

The first step is to hire a qualified buyer’s agent, preferably one certified in distressed properties (CDPE). The next step is to talk with a lender that can help you qualify for a loan and make sure you know what your upper limit is based on your debt ratio and income. Your real estate agent will be able to refer you to their preferred lenders. Once you know that you can qualify for a loan, we can start the search for you. Once you have identified your top picks, we can schedule showings just like any other property. Remember the seller still owns the house not the bank..so we still have to get the offer excepted by the seller..bank is just going to approve the amount of purchase.

Is it too late for a short sale if the lender has already started the foreclosure process?

Probably not, but it depends on the lender and where they are in the process and how flexible they are willing to be. If we can get a complete offer and HUD to leander we can stop the trustee sale for happening.

Why does it take so long for the bank/lender to give you an approval letter?

There could be multiple investors that hold the note on the home. The servicer must get approval from each investor. They could be in different towns,states,countries. The lender will order a BPO/Appraisal on the subject home. Lender also has to review all the seller documents.

How many loans are on the property?

If there is more than one loan the transaction is more than likely going to be harder to complete. The agent is now going to need to have negotiation skills beyond just dealing with one lender. When there are two lenders both need to be satisfied. There are some lenders that will only allow a 2nd mortgage holder to get X amount of dollars. The agent representing the seller needs to know how to get past any difficulties that could arise between disagreements with the two lien holders. If there is 3 loans on the home you would like to buy..RUN like the wind don’t waist your time,just to hard to get all three lenders on the same page.

How many offers will the listing agent send to the bank?

This is an extremely important question to ask. The correct way to handle a short sale transaction is to have the seller sign an offer that makes sense and submit that to the lender. It should be no different than any other sale. The seller owns the home and they either accept or reject an offer that comes in.

If the listing agent tells you that they will be collecting offers and submitting all of them to the bank you might as well tell your buyer client not to get involved. This is a very big red flag! It shows that the agent is clueless and has no idea how to correctly represent a seller in a short sale. Without a signed offer neither the seller or the buyer has a contract. There is no obligation on the buyers part and the seller could be left with nothing. The bank does not want to be in a position of reviewing multiple offers either.

The other mistake I see short sale sellers agents making is submitting any offer to the lender for approval whether it makes sense or not. One thing you need to understand is the lender is not going to accept a short sale if the accepted sale price by the home owner is way under market value. The offer amount submitted to the lender needs to make sense! The lender will send out an appraiser to verify the value and if it does not meet the parameters it will be rejected.

Have you had approval on this home before?

By asking this question if you match the last offer could speed up the approval process.

Do I have to pay the sellers back taxes?

No the lender will pay the back taxes..you will have a clean title when purchasing the home.

Will I as the buyer have to pay the sellers difference owed on the loan?

No the lender will absorb the difference. This will be worked out between the seller and the lender. You as the buyer are just buying the home for what you wrote the offer for.

Is a short sale sold “as is”?

Most of the time yes! Will the seller fix a couple of small items to make the transaction go through..maybe/probably. But most of the time the seller has no money and is not going to spend another dime on the home.

Please feel free to e-mail me with any other questions.