What should you know before purchasing a short sale.

Wait.

Yes if the little rabbit has trouble waiting on chocalate milk, you are going to have to wait longer! There are so many people involved in a short sale transaction compared to a regular sale.

Now compare this to a short sale transaction. There are 4 times the number of people involved in the transaction. This shows why it takes 2 to 4 months to close one of these deals.

The diagram displays that there are so many steps involved in getting a short sale sucessfully closed. If buyers can understand the complexities before entering a  into a short sale, they may be a little more understanding. There are so many emotions that run through the buyers mind.

So great, you found a nice house and have an accepted offer from the seller, now what?

The listing agent will send in the purchase agreement along with:

Authorization to speak to the lender on behalf of the seller.

An estimated HUD showing the what the lender will net from the sale.

Sellers hardship letter.

All their financial’s including, bank statements, paystubs, 2 years of previous taxes, and a breakdown of all monthly bills. The average short sale submissions are 100 pages total.

The file is in then imaged and reviewed. They then order a BPO ( Brokers Price opinion) to get a value of the property. If the BPO comes back within reason of the offer, it will be assigned to a negotiator. They then review all of the documents and decide if it should go in for approval to all of the parties in short sale diagram above. Hopefully we are 6 weeks into the process here.  On average short sales will receive an approval from this point within 4 weeks on average.

Another factor that will affect the process is there one lender or two lenders. If there are two lenders are they with the same bank or different banks. Is the second willing to accept what the first is willing to give them.

These loss mitigation agents can be sitting on 100 files. They are overworked in a field that did not exist to this degree a short 3 years ago. Everyone wants to close the deal. It just takes time.

If you are looking to purchase a short sale, commit to the fact it will take longer than expected and if goes smooth you are lucky! The flipside is continue writing offers on bank owned homes along with everyone else and their brother and hope to get an answer in a reasonable amount of time. Regardless of bank owned or short sales, it is not an easy process but the prices are great and so are the rates.

Good news again this month in Las Vegas and nationwide in home sales. Nationwide, home values dropped at a third of what they did in March. From February to March prices showed a 2.2% drop but March to April showed a .06% drop. Our inventories have also shrunk for the 25th consecutive month!

Ask anyone out there trying to get into a property, it is not as easy as one may think. Bank owned homes in Las Vegas are the primary sales right now. The problem is being the highest offer. Because of this, short sales are a better option for buyers who can wait one out because you will have less competition of people writing offers on them.

The Feds have just announced that the Making Home Affordable program will refinance homeowners up to 125% of their home value. This will be good news for some but probably will not help as many homeowners here in Las Vegas where real estate values have decreased by 50%.

So the average homeowner, say who bought a home in 2006 for 200,000. That home is now worth 110,000. At a 125% loan value that would leave the homeowner still short over 60,000 in value. I would believe these are probably the majority of the homeowners in Las Vegas who are facing foreclosure.

To refinance you are going to need a job and decent credit. In order to do a loan modification you are going to need to have a job and make ontime payments until they do the modification. This is not everybody’s situation either.

A short sale is an ideal solution for people who can no longer afford their home,and can’t prove a means to make new payments if the loan was reworked.