Originally, when I first thought of the idea of writing about who should be in the market to buy a short sale property, I had pictured a list of traits. You know,some comical. Some not. The Top 10 Traits of a Short Sale Buyer? With real estate issues having dominated our financial news for over a year now, everybody would surely get a chuckle from it. Right?
The Vancouver Washington real estate market is fairly average in most things. It hasn’t been hit nearly as hard as Los Angeles, Phoenix, or parts of Florida, but there are other cities in the U.S. that are performing better. Short sales are no exception. Although our listing portfolio wouldn’t be a good indicator for this (currently 25 of our 27 listings are short sales) the short sales stats for Vancouver Washington are right in line with national averages.
Having such a huge ratio of short sale listings creates an interesting dynamic within our team. We have become experts at selling these distressed properties and we have added experts to our team who specialize in negotiating the successful sales of our short sale listings with the banks. The real estate business in Vancouver Washington isn’t the same as it was 2 short years ago.
Another important role that we have assumed as this market tumbles, shifts and evolves, is that of educators. We not only educate our short sale listing clients but we also find ourselves offering guidance to buyers and many of their agents. It was during a phone call with a prospective buyer that I realized that a Top 10 List wouldn’t be good enough. This buyer thought that they wanted to buy a short sale home that we have listed but quickly realized that there were better deals for him and his family.
What is a Short Sale? A Short Sale is when the mortgages (money owed to the bank. Often times there are 2 loans involved) on a home equal more than the home is worth in the current market and the home owner is planning on selling the home. Quite simply, the owner owes more than its worth. Generally, there is some outside factor involved that is causing the home owner to sell. Oftentimes the home owner has undergone some type of hardship which forces thesale.
What does that mean for a buyer? It means that the right buyers can get super deals on homes. Why? Because, contrary to popular belief, banks do not want to own homes or property. Many of the homes that are being sold as short sales are just a few weeks from being foreclosure. Foreclosures are very expensive and time consuming for banks. They want to avoid the foreclosure process and are willing to take losses on some of their loans to do so. They are so motivated that they will allow many homes to sell well below their market value just so that they won’t have to foreclose and take the property back. Sounds pretty good, doesn’t it? Well it is. Let’s see if you have what it takes.
Mark’s TOP 10 Traits of a SHORT SALE Buyer! I am just kidding but here are a few key points that you need to know.
The first thing that you need to know is that these transactions take time. Sometimes lots of time! This is the period when most buyers realize that a short sale property is not going to be in their future.The banks are overwhelmed with short sales right now and are struggling to keep up. Their systems are faulty and they are fighting to keep their heads above water. Negotiations can drag on for months. Often times there won’t be any word for weeks at a time. When buying a short sale listing, plan on 45 to 60 days for the listing agent to negotiate with the banks. After negotiations are complete and an agreement is reached, then you should plan on closing in 14 to 30 days.
Also be aware that after 60 days of negotiating, it might not close at all. There have been a few occasions when the banks could not reach an agreement. Currently, most banks are eager to get these homes sold but sometimes things don’t work out.
The price might not be the price – When shopping for short sales be sure to shop well within your price range. Listing agents do the best that they can to list the homes in the lower part of their market range but the banks have the final decision on what they will accept. It is rare to see a bank accept the first offer. Sometimes that difference between the offer price and the counter offer from the bank is staggering. Be ready.
Be financially strong – I will be blunt here: do not ask the seller or the bank to contribute to your closing costs. The seller is not getting any money from the sale of the home and the bank will not pay any buyer’s closing costs.
Use a realtor who is an expert in short sale transactions. Preferably an expert in both buying and listing short sale properties. Using the right agent could be the deciding factor as to whether or not you get a great deal on the home of your dreams. Why risk using someone who is new to the game?