Buyer Expense Advisory For Short Sales
As agents that help both buyers and sellers in Santa Clarita short sales, we see that there is a strong need for agents to educate buyers before writing an offer on a home that is listed as a short sale. Not every short sale will have these expenses we mention, but it is good to be aware that these are some items to expect and questions to ask the listing agent before entering into a contract for a long duration.
What if the house I want needs repairs?
When an owner short sells their home it’s because they are suffering a financial hardship. This typically means there is not enough money for repairs and a short sale is an “as is” sale. A buyer may ask the seller to fix some repairs however, it is not guaranteed nor is it likely.
Will the Bank pay for the termite repairs required by the buyer’s lender?
In most cases the bank will pay for a termite inspection for report purposes only. The buyer would be responsible to do any needed repairs required by the buyer’s lender. If there is no lender involved and it is all cash purchase the buyer can decide not to do any termite repairs prior to the close of escrow.
What if the house I put an offer on has more than the 1st lien holder?
Depending on a number of factors, including the real estate market and the purchase price, additional liens other than the first mortgage will pose an added step in the short sale process. The lender might be persuaded to clear the liens by settling the debt for a less amount owed with the money offered by the first lien holder to the second. In few cases a buyer may be asked by the lien holder to contribute additional monies to satisfy the lien to close the home. A seller in a short sale process will most likely not be able to furnish additional funds to settle with other lien holders.
What if the seller has not paid the HOA (Homeowners Association) fees owed?
In communities that have a monthly HOA and a seller is unable to pay for these fees due to a financial hardship, the agent can request for the delinquent HOA fees necessary to be paid prior to the transfer of title from seller to buyer by the 1st lien holder. Banks will typically approve a certain total amount they are willing to settle for which include HOA transfer fees and delinquencies. The amount they approve may or may not be the amount needed. In this circumstance a buyer would be asked to contribute towards these fees to close escrow. Since so many Santa Clarita communities have HOA’a on their homes, this is a common occurrence.
Will I be able to have a Home Warranty Protection Plan
The bank is simply there to settle the debt between the bank and the seller. They are not concerned as much whether the buyer is satisfied and happy with the purchase of the home. It is up to the buyer’s agent and buyer if they would like to purchase a 1 year home warranty plan.
Do Short Sale Homes/ Banks approve a closing cost credit for the Buyer?
Yes, depending on a wide range of factors. If the buyer is interested in a closing cost credit it is best to write a “clean” offer. Which means making the offer as simple as possible to get the banks approval on the closing costs.
What do I need to pay my agent?
Nothing. All commissions are paid by seller/bank . Our representation is at no cost to buyer.