Hot Homes Of St. George
Equity Real Estate 1173 South 250 West Suite #2 St. George, Utah 84791 (435) 862-3303 Office   |
Understand Short-sales in the St. George Utah Real Estate market
Buyers pursue short sales to get a good deal. So when you see a price listed for a home that you think is too low for the neighborhood, before you jump on that price like hot fudge on a sundae, ask your agent to call the listing agent to find out if the home is a short sale.
Because you might want to think twice about making an offer on a pre-foreclosure, short sale home. It's not as simple as you may believe, and very few can close in 30 days or less. Many of my St. George home buyers have waited 2 to 6 months to close on a short sale, sometimes longer. What is a Short Sale?A short sale means the seller's lender is accepting a discounted payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it.
Be aware that the seller need not be in default -- to have stopped making mortgage payments -- before a lender will consider a short sale. A lender may consider a short sale if the seller is current but the value has fallen. The seller may have over-encumbered, owe more than the home is worth, so a discounted price might bring the price in line with market value, not below it. If there are two loans, you could have a problem. The first mortgage lender's position is protected by the second lender, unless the second lender does not want to foreclose. If a seller owes $160,000 on the first and $40,000 on the second, offering $160,000 leaves nothing for the second. The first will need to give something to the second to gain its cooperation. Hire an Agent with Short Sale ExperienceIt's one strike against you if the listing agent has never handled a short sale, but it's even worse if your own agent has no experience in that arena. Rest assured, that the Agents at www.HotHomesofStGeorge.com are experienced at Short-Sale, Foreclosures and the process involved with each. Our experience in short sales will help to expedite your transaction and protect your interests. You don't want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner.
Prepare the Seller for Lender DemandsA lender is not going to agree to a short -sale unless the seller has no equity and is unable to repay the difference between your sales price and the existing loans. Sellers need to provide a hardship letter to the lender. Sellers may also owe taxes on the amount of debt that is forgiven.
A seller I know once demanded that the buyer slip the seller $1,000 to be given the right to purchase the seller's property. We said no. This is fraud. The lender legally pursued that seller. Do not be lured by sellers who suggest this practice. In a short sale, the seller receives no money because the lender is losing money. Submit Documentation & Purchase Offer to LenderOnce the seller has accepted your offer, it is then sents to the lender for approval. Once your offer has been submitted to the bank, the seller will continure to show the home, and look for back up offers should your offer not go through, or get accepted by the bank because it was too low. In addition, the lender will want to see that you have your own loan available and you are preapproved. Send a preapproval letter to the lender.
Submitting Multiple offers
Many buyers wonder what the next step is after making an offer? Do they just wait around for weeks, or months waiting for the bank to respond to their offer? While there's nothing you can do to speed up the process while waiting for a response from the bank, you can continue searching for other homes that you are interested in. Infact, YOU CAN EVEN SUBMIT MULTIPLE OFFERS on several homes, and not worry about being "under contract" on more then one home. Here at HotHomesofStGeorge, our Realtors use a Short-Sale addendum which allows you to submit multiple offers, on multiple properties that you like, and have NO obligation to purchase any of them until YOU accept the acceptance and terms back from the bank on those offers. AND no, you don't need to put down any Earnest Money until AFTER the bank accepts your offer. To
learn more about the Short-Sale addendum that we use, click on this link here.
DeadlinesDue to the recent high number of foreclosures and short-sales, the response time from banks have been VERY slow (2-6 months) as of late, although they are getting better. Some lenders submit short sales to committee, but most can make a decision within two to three weeks, providing you have submitted the offer to the individual in decision-making capacity. The listing agent should get a name and phone number for the appropriate contact at the lender. Expect Commission NegotiationsRegardless of the commission the seller has agreed to pay, the lender is actually the entity paying the commission. The reason is the seller is not receiving any money with which to pay a commission. Since the lender is losing money, the lender will likely negotiate the commission directly with the listing broker, who will then share the commission with us, your agent. So in Short-Sales, it doesn't cost the buyer OR the seller anything, since it's the lender who will be paying the commissions.
Reserve the Right to Conduct InspectionsGenerally, the lender will not pay for customary items that a seller would pay. These include home protection plans for the buyer, buyer credits of any kind and pest / termite inspections. A buyer will be asked to purchase the property "as is," which means no repairs. It is extremely important that a buyer obtain a home inspection and pay for other types of inspections such as pest, roof, sewers, septic tanks, chimney or fireplace inspections. Do not waive your right to obtain these inspections and make your offer contingent on approving them. We are associted with the best home inspectors in St. George Utah. We can stress enough of having a home inspection here in Southern Utah. The $300-$500 inspection fee could save you thousands in the long run, and an endless amount of heart-ache and trouble. A Home inspection is a MUST for a wise investor.
Please contact us, or call us @ (435) 862-3303 if you have any additional questions about the short-sale or Foreclosure process regarding Real Estate in St. George Utah. |
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