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

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

LEHIGH VALLEY REAL ESTATE Home Search

 

 

 

 

 

 

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.

 

 

12 Surprising Factors Affecting The Short Sale Timeline – Information about Short Sales

12 Surprising Factors Affecting The Short Sale Timeline

Information useful for Homeowners going through a Short Sale and The Buyer who purchases that short sale

 The amount of time it takes to sell a property via a short sale depends on a number of factors, all of which must align to produce a sale.  It may take anywhere from a couple of months to well over a year to complete a short sale.

Below are some of the factors:

  1. The seller’s responsiveness.  One of the biggest causes of a delay in the short sale is the seller themselves.  Their mortgage lender asks for documentation throughout the short sale process, and many times the lender will ask for updates on paperwork that was already submitted.  Many sellers are slow to produce paperwork, either because they are disorganized, emotionally upset, or confused about the nature of the paperwork.  The ideal short sale seller responds immediately to requests for paperwork without questioning why the lender wants it.
  2. The lender’s internal policy.  Each lender has its own timeframe for a short sale. They may have a policy on who has authority to advance or escalate the file to the next stage.  Many borrowers attempt a loan modification first, and many lenders will not consider a short sale while a loan modification is being considered.  In most cases, the lender’s staff is overwhelmed and that delays the process.
  3. Involvement of other lienholders.  If there are multiple lienholders, that might prolong the short sale negotiation because everyone has to approve the sale.  In most cases, each lienholder may attempt to limit what the other lienholders receive, which can complicate the negotiation.
  4. Involvement of a mortgage insurer.  If a mortgage insurer is involved, then they have to agree to the amount of the loss that the lender will take.  That injects an additional decision maker into the process.  The mortgage insurer may have certain rules about what they would approve, and the lender may have to abide by those guidelines.
  5. Involvement of a Government Service Entity (GSE).  If Fannie Mae, Freddie Mac, the Veterans Administration (VA), the U.S. Department of Agriculture (USDA), or the Federal Housing Administration is involved, then they too have to approve the short sale.  That injects an additional decision maker into the process, and each entity has their own procedure.
  6. The type of short sale program.  There are federal short sale programs, like the Home Affordable Foreclosure Alternatives (HAFA).  There are lender programs, like the traditional short sale and the cooperative short sale.  Each program has guidelines on timing.  One program may require that the property not have an offer on it yet, while another lender’s program may only consider a short sale if there is a signed contract with a buyer.
  7. Involvement of a third party vendor negotiating for the lender.  Some lenders, particularly Bank of America, like to use third party vendors to help negotiate with the seller.  These third party vendors work for the bank and may have their own procedures in addition to the lender’s rules.
  8. Involvement of a third party vendor or attorney negotiating for the seller.  A third party vendor or attorney working for the seller may have their own guidelines. They may only advance the short sale if all paperwork is received from the seller up front.
  9. The ability of the listing agent to procure a buyer.  Even if the short sale approval process is moving along quickly, it is essential to have a ready, willing, and able buyer.  Without a buyer, there is no closing.  Some properties, such as houses in need of repair, may only appeal to a certain segment of the buyer pool.  If a lender pre-approves a short sale at a certain price, but buyers believe that price to be too high, then there will be extreme difficulty in finding a buyer.
  10. Expiration of the appraisal or Broker’s Price Opinion (BPO).  Even if there is a buyer and if the process is moving along quickly, a lender may slow the negotiation because the previous valuation of the property is too old.  Some lenders may only consider an appraisal if it occurred in the past three months, while others may only approve a short sale if the appraisal is less than six months old.  Also, it may take days or weeks for an appraiser or BPO agent to submit their report.
  11. The amount of time it takes to prepare a preliminary HUD-1 Settlement Statement.  Sometimes a title agent or attorney may not be able to put together the preliminary HUD-1 form fast enough.  A lender needs to see a preliminary HUD-1 statement prior to making an approval decision.  The title clerk may have insufficient information about the outstanding liens and payoffs to meet the deadline posed by the lender.  The lender could arbitrarily close a file if a single document is not received.
  12. The buyer’s willingness to stay in the deal.  Some buyers back out of a short sale even when it is approved.  They may lose their ability to obtain financing, or they may find a more enticing property to buy.  Some buyers become frustrated and terminate their contract, which may occur mere days before an approval is granted.