4 Short Sale Myths Debunked :: Real Estate for Santa Clarita Daily Update
Here is some great info Cherrie Posted on Trulia about Short Sale myths that we hear often in our dealings here in Santa Clarita.
Short Sale Myth #1: Short Sales Take 12 to 18 Months to Close
The fastest I have been able to close any of my short sale listings has been in less than 3 months. But I’ve also represented buyers who were able to step into another buyer’s position, after that buyer walked away prior to short sale approval, and close within a few days.
Here is the time frame for an average short sale when the loan is held by a cooperative bank.
- · Seven to 10 days for the lender to acknowledge receipt of the complete short sale package, which consists of personal seller documents and related real estate items, including the buyer’s short sale offer.
- · A negotiator is assigned. An additional 30 to 45 days for a persistently or appraisal.
- · Another 2 to 3 weeks for management / investor review and short sale approval.
This is based all on the seller sending in all documentation and the listing agent persistently contacting the bank.
There are programs available to homeowners that offer a pre list price and pre marketing plan before the home is listed for sale which allows the short sale process to be much quicker for a buyer. Example; Bank of America has a program called Coop Streamline Short Sale which the homeowner can request. The guarantee a 10 day response on any offers received, and offer a pre list price based on appraised value. There is also a seller relocation incentive up to $2500. Both owner occupied
and non owner occupied properties may qualify.
Short Sale Myth #2: Short Sale Buyers Pay Too Much
In some metropolitan areas, listing agents may deliberately price a short sale below market value. It’s a tactic short sale agents use to attract multiple offers. After all, a listed price on a short sale is fabricated, because you won’t know how much a bank will accept until the offer is submitted. But many banks will consider a price at a minimum of 90% of market value. Some
banks reject short sales because the offers are unreasonable.
Short Sale Myth #3: Short Sale Banks Won’t Accept a Severely Discounted Payoff
Sellers are often astonished to discover that in markets where prices have fallen over a 5-year period, a home might be worth 50% or less of its original value when the seller bought it. Banks understand declining markets. Moreover, banks will conduct their own research about value and come to the same conclusion. The value of the home is not based on the amount of the mortgage; it’s based on recent comparable sales. Recently I had a seller that owed close to 1.4 million and the bank (investor) accepted a net near 600k.!!
Short Sale Myth #4: Sellers Must Be in Default Before the Bank Will Approve a Short Sale
Banks approve a short sale based on the seller’s hardship and the value of the home. Some sellers may struggle to make the monthly mortgage payment, yet have not fallen behind in their payments.
While it is true that sellers in default receive immediate attention, a seller can also pay a mortgage payment on time each and every month and still qualify for a short sale. An added benefit for being current on the mortgage is a seller may qualify under Fannie Mae guidelines to
immediately buy another home.
For more information on the Short Sale process contact us anytime!
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