I never forget one our Short Sale transactions where the bank didn’t like the way the buyer’s name was listed on the purchase contract and suspected fraud. But the kicker was that they were not telling us or the negotiator about the problem, so the documents were simply being rejected on Equator!
Yes bottom line is that buying a Short Sale home is not for the faint of heart cause there are too many moving parts including a lender who could be trying to foreclosure on the property and a stressed seller who might NOT be sharing all of their plans with their listing agent.
So, if you find your dream Short Sale Listing you should discuss these 10 questions with your agent before he/she writes you an offer:
1) Number of loans and Lender(s) :
Depending on the number of loans the Listing Agent of this Short Sale could be required to negotiate with EACH lender to obtain the approval for the sale. We recommend to our buyers that they avoid homes which have more than 1 loan being negotiated to keep the risk manageable.
Also, not all lenders are created equal when it comes to Short Sale. Wells Fargo
and Bank of America
have made significant investments in training their Short Sale negotiators, but other banks are still in dark ages where they force us to fax 600 page documents to them.
2) Is the the 1st time that seller is attempting a Short Sale?
If the Homeowners filed for a Short Sale approval and did not proceed with the approval to sell the home, then it will take another 18 months for them to attempt another Short Sale. So, make certain that the lenders will play ball with your Short Sale offer.
3) When was the last Mortgage payment made?
Most lenders will not approve a request to postpone a Trustee Sale
(Auction) date; if they have not received a payment in the past 12 months. So, don’t bother with an offer if the owners have not made a payments in a long long time since the Foreclosure train has already left the station and your offer won’t stop it.
4) Is there a trustee date set? How close are we to that date?
Most Short Sales take as much as 30-60 days to close. The California State law mandating a decision from lenders on Short Sale approvals in 30 days helps, but if the Trustee Sale Date is within week, then your offer won’t be processed in time to stop the foreclosure.
5) Has a Trustee Sale Date been postponed on this property?
Most banks who have not received a payment in the last 12 months will not postpone the trustee sale date. So, if a sale has been postponed on the property you are interested in, then you might be forced to close 2 weeks before the trustee sale date. If that’s not an option, then keep looking.
6) How about Bankruptcy? Are they considering it?
Filing for a Bankruptcy would stop the Short Sale process till a decision is made by the bankruptcy judge on the liquidation of Assets. So, if seller of the property has filed for bankruptcy, keep looking for OTHER properties while keeping an eye on this one.
Click below if you want to find out if you qualify for a Short Sale.
Bottom line is that if you are not working with a seasoned agent, you could be wasting your time on buying Silicon Valley short sale.