Earlier this week, while at a short sale seminar, I learned several things. I learned that sellers no longer have to be delinquent on their mortgage in order to short sale their property. I also learned that buyers and sellers should not be charged an upfront fee by a Realtor or another third party to negotiate the short sale with the bank, (attorney's excluded). Most importantly, I learned that the short sale process is about to go through some major changes.The talk is that the banks are going hire large, third party asset management companies to process the back log of short sales that the banks are facing. This should mean that short sales, which for the passed year have had a negative stigma, might finally be the ideal vehicle for buyers, sellers and the banks to move unsold houses off the market.
Explaining a short sale is quite simple. It's when a bank allows the borrower to sell their house for less than what's owed on the mortgage. Explaining the process, however, is not so simple. It seems that every Realtor has their own set of rules, as well as the banks. It's truly one of the main reasons why short sales have such a negative stigma. There is just not a set standard of rules dictating the process.
So, how do we cure the syndrome. It's good news to hear that some changes are coming to the system to alleviate the banks of their back log. Hopefully this will standardize the process and makes things move a lot quicker. So if you are thinking about buying or selling your home as short-sale, you still need to be patient. In time, however, the short sale process will begin to mean what what many people believe it to mean; a quick closing.
The big question is: Will the changes really make a difference? It really depends on what truly changes. There is a lot that both, the banks and Realtors, need to do to make a short-sale a viable buying/selling option. If we can come together and establish a system that is fair and balanced, then, yes I do believe it will make a difference.
Here are some other quick pointers I picked up at the short sale seminar. I like to call them Radio Checks.
RADIO CHECK: The word is, that if you can afford to pay your mortgage then do so, even while going through the short sale process. It should help protect your credit in the long run.
RADIO CHECK: Those who sell their house as a short sale will get a 1099 from the bank for the difference, creating "Virtual Income". Make sure your accountant knows how to properly handle this issue so you don't get stuck paying taxes on money, you didn't really earn.
RADIO CHECK: It may be a violation of RESPA for the seller to force the buyer into using the seller's title company. The buyer may not have to pay for the title policy, however, there are still charges that the buyer will have to incur, and without anyway of negotiating those charges.
RADIO CHECK: - With regards to those of you interested in buying a foreclosure, just because a property is listed for 150k doesn't mean that it will sell for 150k. If the current comp in the area is 200k, you best make sure your offer is in that range. Basically, what the banks have done is created an auction. In where the highest and best offer wins. They price the house super low, get dozens of bids, and then voila, SOLD!
I know that the short sale process is complicated and nerve racking. Please feel free to call me anytime to discuss your short sale at length. I'd be happy to help you list or buy.
This is Aaron Glassman, signing off! That's all there is, there is no more. Have a great day everybody!
The phone rings. It's a buyer. He wants to put in an offer on a foreclosure. He bids higher than the asking price. I tell him that his bid is still not high enough. I know this, not only because I just went through the same scenario with a another buyer, but because I have an email on my blackberry from the listing agent telling me she has offers way higher than the asking price. She asks me, "Are you sure this is his highest and best offer?" I confirm with the buyer and guess what? His offer is not accepted. A cash offer, instead, for "Way Higher" was selected by the seller.