One of the most frustrating thing for a family or individual looking to move into their next home is having to wait months for the bank to make a decision on whether or not they are going to accept their short sale. This can be a torturous process for a family, especially if they are waiting to move into a new school district or have other time constraints that are putting pressure on their move. What is even worse is waiting 3 or 4 months for the bank to respond and then the reject the offer.
I remember when I bought my first house about five years ago in Long Beach, California with my wife, I was so excited that I actually broke into the house the day it recorded instead of waiting for our agent to give me the keys. I just wanted to get in and start the working ripping up the carpeting and seeing what the hardwood floors looked like. It was so excited.
Even though I primarily work the listing side of short sales in Los Angeles and Orange counties, I occasionally represent buyer’s wanting to purchase short sales. To date, all have been accepted by the bank and my client’s purchased the property at our original purchase price. To prevent the useless agony of having to wait months for an answer from the bank only to be rejected, I have develop five critical components when deciding to pursue a short sale:
- Make sure you are dealing with an experienced listing agent. Before my client’s put an offer on a short sale, I always call the listing agent and asked how many short sales they have done before and what is their success rate.
- Know who the lenders are on the home. This is becoming more and more important. Some lenders are not even entertaining short sales anymore. Also, I know which lenders tend to be easier or harder to work with so we know what we are getting into before we start.
- Find out if they have to short one or two loan. Typically, if the second only needs to be shorted a little it will have a high probability of closing, but if the second is going to get completely wiped out and the first also needs to short—expect delays, especially if the first and second are different lenders. I try to avoid these all together.
- Use the Short Sale Purchase Contract Addendum. This Addendum was recently created by the California Association of Realtors (CAR) and protects the buyer from having to removing contingencies before the bank has accepted the offer.
- Be ready to close. When the bank starts giving good signals that they are going to accept your short sale offer, make sure you can close within 21 days. Typically, the bank will only give 20 to 30 days to close a short sale escrow. So, if you have an FHA loan or other type of government loan that might take 45 days, get this started early.
Sincerely,
Mark Shandrow
Shandrow Group
Keller Williams Realty
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