frequently asked questions and answers about short-sales and foreclosures
Posted by Shayla Twit on Wednesday, April 28th, 2010 at 5:12pm.SHORT SALES
Q: What exactly is a short-sale?
A: By definition, a short-sale is a sales price for LESS than what is currently owed on the property.
Q: Can we negotiate the price and terms?
A: YES. You can still negotiate the price and terms. The listing price is set by the listing agent, not the bank. Buyers
submit an offer, just like any other transaction. The ending price and terms are up to the bank. They order what's called
an interior appraisal, aka BPO "Broker Price Opinion." And they sell the property within a percentage of that BPO, typically
within the ten percentile. You can certainly also ask for a credit to be paid toward closing costs. You can also offer with
FHA financing. Cash transactions do not get weighed heavier in my experience... however if the price & terms were identical
but one was cash and the other was financing, then yes the bank would go for the cash transaction.
Q: What about unpaid taxes, HOA fees, other liens? Who pays them?
A: If there are any unpaid items such as back-taxes, liens, open permits, HOA fees, they are paid by the lienholder. I would
collaborate with the other agent to make certain that they were on the pre-closing statement that would be submitted to
the lienholder in order to reflect those unpaid items. Once the bank approves the contract and outlined fees, you are set
for closing. Those fees MUST be on the HUD though so it's imperitive that they be calculated accurately.
Q: Why do short-sales take so long?
A: The length of time it takes to negotiate and close a short-sale transaction varies depending on how many lienholders there
are on any one property. I have seen up to three! They all have to agree to the short-sale. It also depends on which bank
has the lien. Some banks take longer than others to respond. It also depends on whether it is in a condo community versus
a single family home. Condos tend to take a bit longer, especially if there are unpaid HOA dues. The short-sales I have
closed over the last year have averaged out to two-six months.
FORECLOSURES
Q: Can we negotiate the price and terms?
A: YES, you can still negotiate the price and terms of a foreclosure property. However, in my experience, you are not the
only one in the market for a foreclosure, so in most cases there are multiple offers and sell within the 90-100+ percentile.
In many cases they sell for above asking price. Foreclosure prices are still going to be the best "deals," followed by short-
sales generally speaking. However you can still find a regular seller who may not owe anything on the property and sell for
an aggressive price.
Shayla Twit
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