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Short Sale, Foreclosure, Info:
Well, if you are buying in this market, you may encounter a property where
the seller is in default on their note (mortgage) and possibly in foreclosure or
pre-foreclosure.
When a seller gets less less than what they owe, they normally either have to
come up with the balance in cash or they have to go to their bank to get them to accept less to make the deal go through. What can this mean to a buyer??
Well lets look at the process.
Seller Accepts Offer contingent upon "short sale" approval.
Buyers do home inspections negotiate contracts
Seller completes short sale procedures- est time4-5.5 weeks.
Seller, buyer conclude deal.
Simple??? Not Really.
You hope that the seller has had the foresight
to contact their bank in advance to spell out the situation. Often times when sellers are in default (over 30 days late on a payment) they have already been contacted by the bank and might have had discussions with a "work out" rep or "default" rep. One of the first things this rep will ask them for is a complete financial which can take most people a couple of weeks to assemble.
When the seller formally petitions the bank to accept a short sale in lieu of
foreclosure the bank
asks how the seller intends to paying them back later. If the seller has retirement moneys available or is expecting a fixed settlement, etc. they are going to want to set up an
arrangement to get paid back
from the seller at a later date. The seller then is going to have to cry poor with them and negotiate not to have the bank get any money from the kids college fund, their IRA, SEP, life insurance investment policy, etc. What this means is, that this all takes time.
If you are a buyer, you want to know where you stand right away on any
contingency offer.
It can take upwards to 2 - 3 weeks for a seller to navigate through the negotiation process with a seller to work out a mutually satisfactory short sale agreement. In that time, you are cooling your heals on the sideline wondering whether or not you should still be looking for other homes to buy because it will all seem like crap to you on the outside.
So yes, it can get pretty sticky
when you are buying a property and the seller is not only walking away with nothing but may have to come to the table with his life savings to make the deal work. Your patience will be tested in any short sale scenario, believe me. We handled several dozen short sale deals in the early 90's after the real estate and banking industry collapse here in Massachusetts and can help you with some tips, specific traps to watch out for, and strategies on how to get the best arrangements in a short sale scenario.
Why not give us a call??
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