Short sale supplies needed: Time, Patience and Fortitude. New Milford CT Real Estate Talk
So, you are thinking of buying a short sale in New Milford CT? There are some good deals out there for sure, but you need to be prepared for what lies ahead. Most important thing to remember, short sales are not foreclosures! The lender is going on the premise that they want the house to sell at fair market value.
Getting approval from the lender(s) can take time. There is no set protocol, different lenders have different ways of working. What may take a month or 2 from one lender may take 6 months from another, there is no rhyme or reason to the disparity. And if there is more than one lien on the property then it will be a more complicated process.
So, let's say you put in an offer and the seller accepts it. The lender will then have to approve the short sale and this is what takes time. After they order their own appraisal of the house they may ask you to renegotiate the price, they may reject it outright, they may accept it. Their approval will be based on many things, including the loss they are facing. The dollar amount, the closing date, the strength of your offer. All these come into play when the lender is deciding if it is in their best interest to sell this property short.
You may feel like you are in a holding pattern while waiting for approval of the short sale from the lender, however you are not really in a holding pattern at all. You must still perform, make application for your mortgage, get the inspections done, get all your ducks in a row. As soon as the lender approves they will demand you close according to agreed upon dates. When that call comes in to the listing agent that the short sale is approved, you had better be ready to pull the trigger! If you were advised to sit and wait, to do nothing until approval is given you may well lose the house you have been waiting for.
Do not think what is good for the goose is good for the gander. No indeed. You cannot make them wait because they made you wait. The lender is ultimately driving the bus, and this bus driver will stop and tell you to kindly exit the vehicle if you cannot perform as promised!
So if you plan on purchasing a short sale in the greater New Milford CT area, remember your tools. Time, patience and plenty of fortitude!
Andrea Swiedler, Realtor® & Liddy Adams, GRI, Broker Associate
Cell: 203.460.1775 Email: andrea@andreaswiedler.com
Swiedler & Adams, we know real estate!
Prudential Connecticut Realty, New Milford & Litchfield, CT
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© Andrea Swiedler, 2009 - 2012
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Well hello there Andrea and a wonderful post, I like the peoples bodies with "Clocks" on them because Short Sales can take so long and be so frustrating ...
VB ;-)
Nothing short about short sales.
"Time, patience and plenty of fortitude!" - great advice for anyone considering a short sale. Too many make the mistake in thinking that they can just sit and wait, not realizing that they should be proceeding with "getting their ducks all in a row". Your advice is great and well put.
VB, nope, nothing short about them at all.
I Sharon, I have always thought we should call them something else!
Leah, thank you. If buyers don't prepare for the moment the lender gives permission, they may find the wait was for nothing.
Hi Andrea, and plenty of alcohol!
I'm awake for 5 minutes only to log into equator to find out that the negotiator left me a message about the purchase agreement: illegible document! I should tell her to get glasses because it's very legible. Now I have to make a call when I get into the office later. Sigh.
I've been dealing with this since May so send some of that patience over here along with a big bottle of anything :)
Jackie, that is so uncalled for. I have an unopened bottle of wine under my desk, will send it to you!
Andrea, when dealing with a short sale, it is best to write into the contract as the buyer's agent that the time-lines start after the bank acknowledges and accepts the offer. Although the seller's agent may want to jump on the deal as soon as the short sale is approved, the buyer still needs to know if it's going to be approved, and there is no reason for them to 'get their ducks lined up' if they don't know if it's going to happen. The buyer should not go forward with the inspections or anything else without the knowledge that the property will be theirs. To do so would be foolish and potentially lost costs. If the bank comes back with an excessively higher counter because of trying to recover some additional dollars the buyer would have the option to walk and would have lost money as well.
Ed, I can say with 100% certainty, that not preparing can cost the buyer the house. And I think lenders are aware of the fact that once we put those magic words on the listing "short sale approved" and the house is priced at the approval amount, there is a great chance the home will sell.
With no "skin in the game" there is no motivation to do things in a timely fashion.
Of course if indeed the buyer wanted the house for far below market value..... that is a horse of a different color.
Good informtion, Andrea. I think sellers who have to do "short" sales always think that short means fast. They are usually surprised when I tell them how long their "short" sale can take :)
"Time, Patience and Fortitude"
Andrea, the three words that BEST describe what is required in a short sale!
It must also be noted that, there are no guidelines for Short Sales, either from Fannie/Freddie/HUD or anyone. The bank may approve an owner's Short Sale package and then refuse to cooperate in the transaction if a Contract of Sale is submitted for approval and THEY DON'T HAVE TO TELL YOU WHY.
I am of the opinion that the banking industry HATES AND DESPISES Short Sales and is engaging in deliberately dilatory and obstructive processes.
It is inconceivable that so many banks have engaged in the same procedures by accident.
The reason why many short sales do not close is due to the agents involved that are absolutely clueless on what is acceptable and what is not. Like our discussion the other day...why in the world would you let a buyer have all their contingencies in place after short sale approval? You are just asking for a failed short sale when you do that!
I too think that having an agent who is clueless with short sales will slow things down. I would recommend you find an agent who knows how to negotiate through the system to move/ or keep the sale moving.
Patricia/Seacoast NH :& ME
As Lenn said .....there are no guidelines and rules. I really can't believe that with all the blustering in Wash DC you would think they could address the procedure for short sales. But it's not a "sexy" issue and doesn't help with re-elections, I guess.
I have urged a lot of agents to use a negotiation firm to handle the actual short sales negotitations and follow up with the bank. For only 1/2% they will do all of the work and you can focus on getting more listings and what your good at.
Andrea..I totally agree with you on what you need to complete a Short Sale. A lot of Patience, If we could do something in DC and let them know that it's hurting the buyer and the seller, I think they would DEMAND that the bank do some thing to move it ahead. I think because we dont have a voice that's why the Banks are in CONTROL.
Dustin #15 although it's good to get more listing according to Dustin it wont be of any good if we can't close on them and help the seller and buyer in the end.
Lenn is right. I applaud every buyer who hangs in there till their short sale is completed. I reblogged you, Andrea - encouraging and informative post.
Toni, there is nothing short about it.... except for the lien holders...
Russ, we all need more of it too.
Lenn, if there were guidelines we would be a lot better off. When I have to pull information from every state in the Union, get advice from those who practice real estate in a totally different way than we do, when we have such disparity as to time from offer to approval, it is just a total nightmare.
Bill, I can't thank you enough for sharing your knowledge, wisdom and thoughts on the process. I am going to revamp a few things for sure. The fact that we all do things differently, custom is different in each part of the country, just makes it all the harder. Thank you.... I owe you a box of cookies!
Patricia, we all hear how listing agents better know what they are doing, but that goes for buyers agents as well!
Karen, I heard that they wanted to put a 45 day time limit on approvals. All that will happen is.. if lenders want more time they will just deny and the application process will have to be started all over again. IF they can stop this type of nonsense, I am all for it! But sexy it ain't...
Dustin, in the beginning I did too. Then I ran across so many shady deals this way. I will drive the bus. As long as everyone is on the same page....
Donna, as I said to Karen above, any time restrictions, unless accompanied by a huge penalty, will fail, in my opinion. But something must be done. In the meantime, agents must learn all they can. Buyers must be aware of the truth about short sales. They can and do happen, but we all must be prepared.
Dawn, thank you for the rebog. I agree, buyers who hang in there, sellers who hang in there, even agents who hang in there are to be applauded!
Yes patience is needed. Most buyers simply don't have the patience for a short sale. I have seen short sales kick a lot of buyers out of the market. There really is no reason why they can't be processed in 30 days. But there are still lenders out there like Chase who are taking 5 - 6 months to even look at a file. I would only put an investor into a Chase short sale.
I suspect that if enough lawsuits are filed against lenders for fraud and lack of approved business procedures, short sales will be the only way out of this. I just don't get it. there is no short against the banks. They don't lose money, its the borrower that lost....Banks get an immediate cash infusion and the up to 80% reimbursement from the feds. Add that to a down payment and payments made (which were mostly interest) and you don't get bank losses....Something else is going on and it smells.....its a bank odor....
I love your title, but I'm not in total agreement with the advice. With no guarantee that the lender will approve the short sale it is unfair for the buyer to be asked to pay for inspections. Once the short sale is approved the buyer will have 30-days to close which is plenty of time to do what they need to do to get the transaction closed. The buyer's still should have their contingencies in the contract and advising against that is dangerous.
Other supplies needed.
As the listing agent: Honesty, Drive and Education
You need to work it hard and be calling and emailing, which has helped me close a bunch of deals. Also, if you have the designations and education, it helps cut some corners and through my affiliations, I can shorten the time on a lot of these.
As the buyers agent: The ability to say NO to show those properties unless the agent is well educated and willing to let you help them close this deal.
Too many listing agents think they know how to do a short sale when in all reality, they have maybe closed a couple in the last three years. It is OK to be humble and let another more seasoned agent help. Don't we all just want to get paid? I think so.
Short Sales Listing Agents, check your ego at the door, or I'm going to bring my buyer back after the auction and buy the home anyways....
Very good post. I'll join the cry for some standardization and good practices in short sales.
Such an excellent post! I helps people really grasp what a short sale is and it educates them about the entire process! Thank you!!
Good Post. Those three qualities are needed for short sales and more.
It is so important that both buyers agents and the listing agent know the short sale process. As a buyers agent, interviewing the listing agent about his/her short sale experience should give you and idea of what to expect. As a buyers agent, you really have to educate your buyer on what to expect as well. So I have to agree with you Andrea, Time, Patience and Fortitude are important in Short Sale transactions!
Hi Andrea -- My first short sale back in 2007 was a nightmare for both the buyer and seller as the bank wanted to renegotiate the terms 48 hours before closing. Even if the bank says yes, a partial or even full deficiency request/demand from the investor can sink the deal if the seller says no or can't negotiate that successfully. I learned patience the hard way on that sale back then. You are so right.
Tni, there has to be a streamlining of the process, I will give credit to Webster Bank, they have a great process going. I agree with you about Chase, most buyers couldn't wait that long and there is no reason for that.
Richie, that bank odor is pretty foul, isn't it. They will do better to do short sales in a timely fashion rather than letting people just walk away and let homes deteriorate. Very sad indeed.
Simon, the only way I would go for that is if the house was never taken off the market. There has to be some skin in the game. It is not fair to the seller either, wait 30 to 60 days or more, find out that the buyer is walking because of something in the inspections. This should be cleared up in the early stages. I had an experience recently that opened up my eyes to the issues when you wait.
Jason, I get a little ruffled when I hear that. My short sale experience is directly related to our lack of short sales in the area. I have successfully negotiated 2 in a short period of time. One with Chase, one with Webster Bank. I even got Chase to come down 75,000 after a totally ridiculous BPO from an out of town agent. I sent comps, 2 days later I had my price. Not bad for an inexperienced short sale agent. However... trouble came along when a buyers agent didn't know what to do, didn't listen. I pulled it back on track however. So, you are right, people need to be able to handle either side. But I am pretty damn proud of myself and feel competent to do better than many. And I would add, short sale buyers agents also need to check their ego's at the door!
Brad, thank you. And I do agree, standardization and good practice would go a long way.
Wendy, why thank you!
Scott, yes, they are! Without them you could lose your mind.
Terrie, I think that the unfortunate thing is there is no standard. That can really wreak havoc all over the place.
Chris, there just is not an easy answer. I agree, there are pitfalls all along the way here.
Boy, as I read this, all I can think of is BofA... grrrrrrrrr. I must ask the Almighty God for an extra helping of patience as we attempt to negotiate either incompetency, or ineptitude! Your guess is as good as mine ;-)
Andrea Short Sales are not for the inpatient, and everyone involved in the transaction has to make sure the Buyer understands that.
Andrea, the fact that the lender can at the end do nothing is the hugely frustrating part on short sales.
Once again Andrea great pic of the clock head bodies ...
Vegas Bob
No rules for banks...plenty rules when (if) they give short sale approval. THEN...everyone has to hop, skip and jump. Most of us are good at that ...with our Time, patience and plenty of fortitude!
Patience is definitely imperative because even after a few years of short sales, most lenders have not come up with a timely manner for dealing with them.
Very important traits to have indeed - and well-worth reminding buyers about if they are thinking of purchasing a short sale!
To bad the banks will not promote the loan modification program but rather do short sales. So many working families would stay in their homes if they could just get todays lower mortgage rates.