originally submitted by John Rygiol, Buyer’s Broker, Seal Beach, CA

Short sales are becoming more and more a part of the real estate inventory in 2008. In the first quarter of 2008, I wrote 15 short sale contracts for my clients with very little success. Of the 15 contracts written:

• one closed about a week before foreclosure
• one is in escrow due to close in a few days
• two are still waiting for responses from the lenders after two months
• two lenders chose to foreclose on the property rather than accept a short sale, and
• nine buyers gave up and moved on to other properties due to lack of response from lenders.

I have spent many hours talking with listing agents of short sale properties. The best information that I was able to glean was from those that specialize in short sale properties. Most lenders are very short handed with negotiators handling 200 to 400 files each, and files are handled on a “put out the biggest fire first” basis. Most files are not really reviewed by the negotiators until 7 to 15 days before actual foreclosure is to take place. That is why you have to wait anywhere from 8 to 16 weeks before you get an answer.

Some things that I make buyers aware of on Short Sales: The home is still owned by the Seller and that is who we are making our offer to. Once we negotiate the contract with the Seller, it is then forwarded to the lender or lenders that have the loan/loans on the property for approval.

The lender may counter offer if they feel that the price is too low. Depending on where they are in the process, this may take from 2 to 4 months.

YOU ARE GOING TO HAVE TO BE PATIENT. In our offer, I have put in a time period of 2 months, but needless to say, that may have to be extended. I have also put in our offer that they MAY NOT continue to offer the property to others, but this may be countered back to us. The time periods for inspections and closing shall start the day after the Seller delivers to Buyer a written notice of Short Sale Lenders’ consent. It is at this time that your initial deposit is deposited in escrow. The lenders will not agree to pay anything.

Therefore, in our offer:

• The property is being sold “as is”. Any repairs are your responsibility (you still have the right for a home inspection to see what your costs will be and decide if you want to go through with the transaction).
• We have not asked for a Termite Clearance (we still have the right to have a termite inspection done and see if the cost is not too high for you).
• You will pay for your own Natural Hazard Zone Disclosure Report. ($90)
• You will pay for your own one year home warranty. ($260-$400)

Here is an email that I send to the listing agent before writing an offer:

I am preparing to write an offer on this home. I understand that it is a short sale and would like to get the following questions answered before I write the offer and present it to you.

• Are there any other offers on the home at this time?
• Who is/are the lender/lenders on the home?
• Has a notice of default been filed on the property?
• Has the proof of hardship package been turned into the lender?
• Do you have a “real person” (Negotiator) assigned to the file that you can talk to?
• Have any offers been turned into the Negotiator?
• Have any offers been countered or accepted by the Negotiator?
• How close to foreclosure is this property?

Thank you in advance for your answers to these questions. As soon as I receive them, I will prepare the offer, have my clients sign it and make an appointment with you to review the offer with you.

Last but not least: Most Short Sales will have several offers on them before the Seller accepts the best on that is sent to the lender. In my contract, I put in: Upon Acceptance of this offer, Seller MAY NOT continue to market the property to others.

I hope this assists you in the circumstance that your Buyer wishes to make an offer on a short sale property.

Visit the National Association of Exclusive Buyer Agents (NAEBA) for more information about selling your home.

For more information about Raleigh real estate, contact Buyers Advantage Group Realty today!

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