Yes, that is the question. Can you get a deal on a short sale home today? Hello everyone, This Is Charles McShan with Century 21 Universal in Chicago Ill. If you recall a few years ago Short sales were everywhere homeowners were upside down with there mortgages but short sales back then are still the same way today. The deals did not close quickly, in fact, some deals did not close at all. Why was that? People back then and people still today think that they will have the Bank owning the mortgage under a barrel. They think that the Bankers are desperate to sell that home for pennies on the dollar. Wrong! Why? we will talk about that in a minute. For those who do not know what a Short Sale is let me first refresh your memory.
If I were to go into all the details of a Short sale blog could go on for days. The easy answer is due to certain events whether in the Market with a recession or due to something else you now owe more to the lender then what your home is worth. The price you paid for your home no longer reflects the current financial time due to a recession or other situations. If you try to sell your home today the buyer’s asking price will not what you paid for your home. In other words, you have no equity, you have one or more loans and you are now underwater. You want out. Can you get out?
Are Short Sales Still Popular today?
A few years ago this country was in a short sale epidemic. The Real Estate market had crashed, prices were falling. Short sales and foreclosures were everywhere. It took years for the country to come out of that turmoil. Back then Banks were reluctant to make deals some did, some did not. Today certain things have not changed.
So let’s kill 2 birds with 1 stone. We will first look at a short sell from a seller’s point of view. Back in the day, Short sales took a long time to go through the system. Why? well, Bankers/ Mortgage Lenders had no reason to quickly close a short sale offer. They are in the business to make money on the loan and the interest behind the loan. They will not take a loss on the books until they had no other choice. Back then just like today they will try and wait it out to see if the economy will improve and if that happens hopefully the seller can pay off his/her mortgage and the lenders can make their profit. That is why the lenders back then and today demand a lot of paperwork from the seller. They want to know their complete financial status.
Once they get that paperwork, those documents begin a long journey throughout the lenders’ office going from one department inbox to the next department inbox. Each time the documents will go to the bottom of the pile and work it’s a way back to the top. That journey would take weeks. Documentations sometimes also get misplaced or lost and that also causes delays. The lender could ask for an appraisal, At the conclusion of all this, a department head might say no. Your asking price sales price is too low. Why did they say no? The Lender will not take that sort of loss right away. They will let it drag out with you still living there and at the right time, they will let you go underwater and drown. They will either evict you or you get mad and vacate the home. The lender would then attempt to make more money by taking the property through the foreclosure process. They wouldn’t care about you and your ruin credit. Nothing personal they would say, just business.
They foreclosed on homes that away by the Thousands back then in the early 2000s. But they also allowed a lot of short sales to close back then. They had to clear up inventory and get those homes back on the market any way they could. Today is no different, in certain cases, they will allow it, on other cases they will not let the home buyer do a short sale.
As a Buyer Can I Still Find a Good Deal Purchasing Short Sell Home?
Now let’s look at it from the buyer’s side and answer the original question. Can you still get a deal on A short sale? well, reread the above 2 paragraphs because those steps will also apply to you. Let’s say that you found a home that you like. You also find that it is a short sale. Your Broker explains the pros and cons of a short sale process and you still say yes. I still want that home. So like any other real estate deal, you signed a contract and put down a certified earnest money check. Your down payment will now be officially attached to this short sale contract. Unlike a regular real estate transaction where you know the asking price, a short sell contract is different.
Problem 1: The asking price on the contract could be the price that the Seller/Broker could have placed on there not be the price the lender is willing to accept. So the contract will now start the slow journey of going from one Lenders department to the next and any department could jam the deal or delay the deal. Papers can get lost and at the end of the road, a department head can say we will not accept this asking price. We want more money and now months later it is back to the drawing board.
Problem 2: They have your earnest money. It will be tied up for weeks or months. Suppose you change your mind or found another home that you like. Too bad, you signed a legal document stating you wanted to buy this property and they will hold you to it until they say no or reject your offer. So if you find another property and put down additional money on that home then 4 months later the short sale lender accepts your offer on the short sale property then congratulations you now have 2 homes under contract.
So in conclusion, for a buyer could a short sale be a good deal?. You must decide that for yourself. Do your homework, When you find out that a property is being sold as a short sale, asked the seller’s broker is the price on the contract the price that the lender has agreed to as the price they are willing to accept. If he/she says no that is our asking price then expect lengthy delays. Do you want to wait weeks or months with your earnest money tied up? The choice is yours. Short sales, for the most part, will always be here and who knows you could get a gem. I trust that this blog post has given you additional information on short sales that if the situation comes up, you will be ready and able to make an informed decision. Thank you and have a good day Sincerely
Main website https://charlesmcshanchicagolandrealtor.com