When to go after a Short Sale...
Posted by Hamid Grinage on Friday, April 10th, 2009 at 11:11pm.When the mortgage meltdown began, one of the first consequences was the phenomenon of the now all too familiar "short sale". When short sales started spiking in 07, it was the first time that many Realtors had even heard the term (including myself). The preceding years had been a time booming appreciation, and the idea that homewowners would end up not being able to sell their homes for what they paid for them unthinkable.
Of course all that changed starting in late 06, and the short sale was something that like it or not most Realtors were going to have to learn the ins and out's of if they wanted to survive. The problem was, that short sales were (and still are somewhat) notorious for being exteremely slow. In many cases, everyone involved ends up frustrated and wishing they never wasted their time on it. Many Realtors (including myself) chose not to even work most of them because of this. I did end up working a few and have since closed them, and it was a great learning experience. The short sales that I have worked allowed me to deal directly with the lenders, so I was able to see what happens from the lenders side. What I learned was that there are different stages and components of short sale, and it's important to pick and choose which ones to get involved with if you are a buyer.
The biggest thing that you want to look for is whether or not the sale has been "approved" yet by the lender. What this means is that the lender has sent a letter to the owner/agent saying that they have agreed to a short payoff and will accept x amount (less what's owed by the current owner) and forgive the owner for the difference. If there is an approved price and they receive an offer fot that price, then typically the timeline is closer to the normal 30-45 escrow period.
The longest period in a short sale is waiting for this approval. So when I have clients who inquire about a property that is a short sale, the first thing I do is find out if there is an approval yet or not, and if not then I explain that there must be a LOT if patience involved if they wan't to make an offer on it.
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