San Jose Short Sale
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) How many loan are on this Short Sale property?
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.
2) Who are the lenders ?
2) Who are the lenders ?
Not all lenders are created equal as most of Home Owners have experienced by now. Large national lenders have now invested huge resources and staff to help expedite Short Sale approvals specially with State mandated laws such as the one in California which requires a lender to make a decision on a Short Sale approval request within 30 day. If the home you are interested has a out-of-state lender that you have never heard of, then your agent should check his Short Sale network to find out the history and experience of other agents who have worked with this lender on a Short Sale transaction.
3) What are the loan and lien types? Have they paid their property taxes? Are there any private liens on the home?
3) What are the loan and lien types? Have they paid their property taxes? Are there any private liens on the home?
Find out if the owners of the Short Sale Listing have paid their Property Taxes along with their personal Income taxes. It’s also important to note that if they have NOT paid their IRS income taxes, they could become attached to the property as a lien. That’s why a knowledgeable Title Rep is critical in your team to steer your Short Sale translations away from trouble.
4) Is the the 1st time they are attempting a Short Sale?
4) Is the the 1st time they are attempting a Short Sale?
If the Homeowners have attempted a Short Sales in the past 18 months and have NOT completed it, then the odds of this lender approving their Short Sale request are slim to none.
5) When was the last payments made on the property?
This is an important piece of information since 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.
6) Is there a trustee date set? How close are we to that date?
5) When was the last payments made on the property?
This is an important piece of information since 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.
6) 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 too close to your close of escrow date, then you might be well severed to keep looking for more properties since this one could end up being auctioned despite your pending offer on this Short Sale.
We advised our clients to avoid properties that have less than 60 days to a published Trustee Sale date since there is no grantee that the Sale date would be postponed.
7) 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.
8) What is the nature of the hardship? Make sure the sellers have a legitimate hardship that the bank can use to approve their short sale. Most lenders have published list of hardships that they require to approve a short Sale which includes Job loss, medical emergencies….etc. Having a New baby does not qualify for a hardship!9) Are there damages to the property? Have the sellers filed an insurance claim for any damages!? Some sellers file insurance claims and don’t use the money for these repairs. If these repairs are require as part of your Short Sale transation, the lender will NOT pay for them and could decline the Short Sale. If the Home Sellers have collected funds for these damages from the insurance company, the Short Sale lender will require the sellres to disclose what has happened to these funds. If the answers are a Hawaii trip; it could go to viability of their hardship and lead to a decline of Short Sale request.
10) 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.
8) What is the nature of the hardship? Make sure the sellers have a legitimate hardship that the bank can use to approve their short sale. Most lenders have published list of hardships that they require to approve a short Sale which includes Job loss, medical emergencies….etc. Having a New baby does not qualify for a hardship!9) Are there damages to the property? Have the sellers filed an insurance claim for any damages!? Some sellers file insurance claims and don’t use the money for these repairs. If these repairs are require as part of your Short Sale transation, the lender will NOT pay for them and could decline the Short Sale. If the Home Sellers have collected funds for these damages from the insurance company, the Short Sale lender will require the sellres to disclose what has happened to these funds. If the answers are a Hawaii trip; it could go to viability of their hardship and lead to a decline of Short Sale request.
10) 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.
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