iSELLeastbayrealestate

As a listing agent for dozens of short sales the past couple of years I can tell you a few ways to increase the buyers odds of an approval:

• Educate your buyer in terms of how long a short sale takes. Do not think because they are an all cash buyer a decision will be made immediately or that an obnoxiously low offer will automatically be accepted. A minimum of 60 days is needed in most cases to get an approval with the additional 30-45 days to close escrow.
• Investors have a formula as to how much of a loss they can take and they will get a couple of BPO’s and appraisal before substantiating their bottom net.
• Understand the sellers have no money. The lenders will only allow for  what is customary and usual for the market you are in but typically will not pay for inspections, most have not allowed for home warranties and most will not allow for repairs.
• Most will allow for up to 3% back in closing costs. (NOT repair costs)
• If you are making a bid on a short sale with issues, take pictures, notate the problems provide comps and provide a written estimate from a licensed contractor as to what it will cost to repair or replace items. As a listing agent we will turn in to the sellers lender for review. Make your purchase offer reasonable upon the factors above with  data to make your case.
• Offer to place at least half of your earnest  money up front as a sign of commitment with a stipulation that after x amount of time there is no movement or communication towards a successful short sale that would allow for buyer to have earnest money returned and/or allow them to extend their wait with rest of the earnest money to be deposited after short sale approval in writing has been given.
• If a buyer has to close within 30-45 days, a short sale is NOT the best choice for that buyer.

We have successfully closed dozens of short sales over the past years because we clean up the contracts before they go into the lender. We set expectations up front. Some lenders want us to pick the best offer. Some want to see all of the offers. We always give an agent who has turned in  an offer that is being processed the first choice to up their ante and/or make offer better if another offer comes in that would significantly reduce our clients deficit. We let competing agents know that up front.

Depending on the lender will depend on whether they want ensuing contracts submitted or just held for backup.

We have found most lenders will stay with the first offer if the buyer is still in the game UNLESS there is a substantially higher offer that will pass appraisal. If the offer is too low most will come back and ask for more or kill the offer and tell us to find another buyer at higher price.

Don’t allow relatives of sellers to present an offer on the home. Most banks have a non arms length policy. If we find out buyer is a relative then we have to notify the lender and most will kill the offer. It is fraud for a buyer to sign a non arms length disclosure when they are in fact related to the seller. Banks are really cracking down on that.

There are no guarantees in short sales. But agents who work together ethically and legally and educate their clients will be very successful in short sales.

So…….1st time buyers, FHA approved, who do not qualify for single family homes or those single family homes are in areas they do not seek to reside and are finding out most of the condominium ‘s are NOT FHA approved.

Hmmm…..suppose one could look at this a couple of  ways…..More takings for the investors and all cash buyers….

Lower prices to come for many areas OR bidding wars for those condo’s that are more popular that are FHA approved.

This should prove to be very interesting in the next months.  It almost seems to me those FHA buyers who sat on the fence and did not purchase in hopes of “finding” the great deal may have taken themselves out of the market.

Of course many of those available were short sale and most likely would not have closed in time anyhow.

I have ran into several HOA associations in litigation and/or the owner occupancy rate has fallen below 50%.

I worked with a couple for a year who was FHA approved and kept getting outbid on single family homes , much less those townhomes or condo’s that would have met their needs. They had relatives who stepped forward to make an all cash offer for purposes of purchase and then went into a purchase agreement privately with those relatives so they could locate and secure a place and we closed escrow in December. Found a  nice townhome with lower HOA fees than many.

Had they not been an all cash offer they would have lost out as there was multiple offers on this unit.

At least in our immediate area I see slim options for FHA approved condo’s.