Short Sales – What is the Current Market Value???

Lehigh Valley Short Sales – What is the current Market Value?

 

 

 

 

 

 

So, Short Sales are sold at current market value in as is condition OR maybe a hair less…like $5000.00 under.  If you get a better deal from today forward – Please let me know because you gotta understand that the seller’s lender is already loosing money because the seller owes more than the property is worth.  The purpose of a short sale is for the property to be sold at current market value in as is condition.

So, How is current market value established? This is HOW It should be estiblished.

1) A Real Estate agent should do research in the local MLS to find out what other properties sold for over the past 3 to 6 months that are similar to the subject property.

2) VERY IMPORTANT: The properties that have sold that are simular must be simular in the following ways. you can not just pick from all of the properties that sold over the past 3 to 6 months – they must be simular to the subject property (the subject property is the property you want to make an offer on)

• They must be within 300 sq feet smaller or larger then the subject property
• They should not be Bank owned or short sale properties if it can be avoided.
• The should by the same or  simular sytle of the subject property – Like if the subject is Ranch – The sold property should not be a Bi-Level it should be a ranch. If the subject is a Twin it is expectable to use Row or end of Row for a comparable.
• They should be within the same year of the property or max of 25 years if possible.
• They should have about the same lot size.
• They should be within .5 or 1 mile radius of the property if Urban (city) 2 to 4 miles if Suburban (just outside city) 5 miles is okay in Rural areas (country) and 10 miles is acceptable if a very unique property.

3) After 3 sold and settled properties are found then they must be compared to the subject property condition vs condition – if the sold properties are in better condition then you should subtract the repairs that are needed on the subject.  An experienced Real Estate Agent who works with Short Sales and Foreclosures should be able to price out a property for you during the showing and tell you a ball park that it will costs to rehab the property – I can do this within about 15 mins of viewing a property.  This information must be proven with written contractor estimates which the real estate agent should be able to get for you at no cost – again this is only for those who specialize in these types of properties.

4) All of this information above will establish current market value for you in as is condition – In a short sale situation it does not matter what the property is listed at because so many real estate agents do not know what they are doing in a short sale situation – You should have proven sold and settled comparables as I explained above and expect to pay current market value for the home – otherwise it is a complete waste of your time to wait around for 90  days to see if the seller’s lender is going to approve your offer – Short Sales are sold at current market value in as is condition and nothing less.

I hope this information was helpful to you.

 

 

Short Sales – Top 5 Buyer Offer Tips – Don’t make an offer without them!!!

Lehigh Valley Short Sales – Top 5 Buyer Offer Tips and maybe a few more

 

 

 

 

 

 

 

So, you want to make an offer on a Short Sale?  Please consider these Top 5 Tips when considering to make an offer on a Lehigh Valley Short Sale property.

1) You need to give the seller’s lender at least 90 days to get written short sale approval.  This is the average time  it takes an experienced short sale negotiator to get written short sale approval.

2) Understand that the seller’s lender WILL NOT approve a short sale at anything less then $5000.00 under current market value in as is condition.  So, be prepared to get a counter offer from the seller’s lender if your offer is NOT at current market value in as is condition.  More information will be coming soon on “How do you know the current market value of a short sale?”

3) If you are interested in getting inspections – which you certainly should if you are a home buyer and not an investor – You need to do the inspections within the first 15 days after the seller signing your offer – What more information check out this video I made last year. 

4) Need Seller’s Assist?  Fine but do not expect to get any more then 3% seller’s assist approved by the seller’s lender.  If the seller has an FHA loan that is going through a short sale only 1% is approved if the buyer is getting an FHA loan to purchase the property otherwise you will need to wait another 30 days to get 3% seller’s assist approved through what is called a variance with FHA.

5) Other conditions no allowed in a short sale buyer offer:

• You can not have a home to sell first – No home sale conditions
• Cash purchases do not allow any seller’s assist.
• If the buyer agent and the seller’s agent is the same person the lender will automatically cut the commissions by 1 to 2% so 4 to 5% commission is the max that will be paid as real estate agent commission.
• The settlement date should say “within 30 days of written short sale approval” if the Buyer is getting a Mortgage and  If a cash transaction – settlement should be within 2 weeks of written short sale approval.
• If there is a ReSale inspection/CO inspection required where the property is located – This is negotiable in the state of PA but typically the seller pays for the inspection and the buyer is responsible for all repairs after settlement. (The property inspection will catch any of these items)
• Yes as a buyer you can get any type of loan for a short sale – This includes FHA, FHA 203K which is a rehab loan, USDA or Conventional.
• You should make sure you write in the condition in your PA Agreement of Sale that you will not be ordering your appraisal until 2 days from written short sale approval or you will be in default of your agreement in 8 days from the seller execution date – If you do not pay for and order your appraisal.
• The short sale agreement of sale and short sale addendum plus all other documents should be wet signed before sending it to the seller’s lender – one of the main reasons short sales take so long is because of the paperwork being sent in without being full executed.  They prefer wet signatures not Esignatures.

So, as you can see short sales should be left up to those Real Estate Agents that have experience on both the listing side and the buying side.

 

Buying a Short Sale – 3 Things you need to know BEFORE deciding to view short sales

Buying a Short Sale – 3 Things you need to know BEFORE deciding to view short sales

 

 

 

 

 

You have come to the right place, as Short Sales are my speciality – I have a passion for helping homeowners avoid Foreclosure via Short Sales – So, of course, I also help those who want to Buy a short sale.

There are honestly a few things you should consider before making your decision to even view short sales as part of your home purchase opportunities.

1) Timing is the most important question for you.  Are you looking to find a home and move into this home within anything less then 3 to 4 months from the time you make your offer? If so, Short Sales may not be the right choice for you.  In most cases, not all of course – Short Sales take 90 days to get negotiated/approved and then it takes about 30 more days for the buyer’s mortgage to be prepared before settlement can occur.  This could be a great opportunity, but not for those in a hurry.

2) Extra Closing Costs In most cases – Not all of course – Short Sales that are handled by experenced short sale processing/negotiating companies have a Buyer Negotiation fee that must be paid.  This can be anywhere from $3000.00 to $5000.00.  I believe $3500.00 should be the most charged for this service, but that is another conversation. So, if you do not have an extra $3500.00 on top of 3% closings costs – Then you will want to pick and choose which short sales you even view. (Those with additional Fee’s and Those without – Keep in mind if there is not a fee – These short sales are most likely being processed by inexperienced Real Estate Agents)  That’s why they work for free.  BUT, once in awhile experienced agents negotiate short sales without a fee too – The best course of action is to be working with a Buyer Agent  that knows how to negotiate short sales so they can help you navigate the process and also assist the listing agent and/or understand how to push them when needed.

3)  Are you looking for a Discounted Property? This is a Myth about Short Sales – There are NOT deep discounts given on short sales.  Short Sales are sold at current market value in as-is condition.  So, the entire point to buying a short sale is that the property is your DREAM HOME and location, style, and layout is what is the most important.  If you are looking to get a discount on a property – Foreclosed Homes/Bank owned homes are where you should be looking, NOT Short Sales.

If you are okay with the above items – Then a Short Sale should be part of your home buying search.

Information is power – as long as you are aware of these up front then there will be no surprises…well, unless you are working with an uneducated Buyer Agent for your short sale purchase…because there is a right way and a wrong way to make an offer on a short sale too. One Hot Topic is having inspections done prior to written short sale approval –  Click Here for a 6 min video about this.