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Short Sale Tip of The Week 9-2-09
Posted on 02. Sep, 2009 by ctlms in Short Sale, foreclosure
Setting Buyer Expectations is Key!
There are many pot holes to avoid in a short sale transaction. Obviously dealing with the lender is the biggest, but buyers and their agents, attorneys, and loan originators can be pretty big obstacles as well.
From the time an offer is submitted there can be months before an approval is received from the lender(s) on a short sale offer. This is plenty of time for a buyer to get there mortgage commitment. But often the buyers and their agents are reluctant for the buyer to spend money on an appraisal before the offer is approved. This is understandable. Who wants to pay for an appraisal on a house you may not be able to buy. Yet that does not prohibit the buyer from getting themselves fully approved.
A buyer can apply for a mortgage even without a fully approved contract. They can received a commitment contingent on the property appraising and passing the required title search. So by the time the offer is approved, the buyer only need tell his lender to get the appraisal ordered. In today's environment that alone can take weeks.
But if the buyer has not already had their income and assets verified, that can stretch it out even longer. Some lenders are not ordering appraisals until the buyer has every scrap of paper required turned in. Rather than working more efficiently and having the appraisal conducted simultaneously to the paperwork gathering.
Most short sale approvals are only good for 30 days. If the buyer cannot close within the 30 days we must request an extension which can often require additional money to the lender for approval. Yet if the buyer can close within the alloted 30 day time frame, everyone is happy.
This is especially important if a foreclosure is involved. Lenders can be reluctant to grant an extension when the foreclosure date is near. They would then have to postpone the foreclosure as well. This would lengthen the time before they could acquire the property through foreclosure if the buyer ends up not closing. Unfortunately the number of short sales that are approved but never close is staggering and the lenders know this.
The take away here is to set the proper expectations with the buyer's and their representatives right at the beginning. Let them know it is in their best interest to do their home inspection before the offer is submitted. Negotiating a reduction in the purchase price later is more difficult and time consuming than submitting that lower price up front with the inspection report. Also the importance of the buyer proceeding to get a mortgage commitment contingent on the appraisal so the appraisal is all that will be required after the short sale approval is received. Better yet, if the buyer is confident in their offer and wants to move forward with the appraisal as well, they can do that to.
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As always Visit the Ask The Expert Page to leave your questions or contact me directly if you need immediate assistance at sean@ctlms.com or visit www.CTLMS.com
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Bio
Sean Wilder started in the pre-foreclosure business in 2007. Previously he enjoyed successbusiness in the transportation industry, real estate investing and as a licensed Realtor. Sean brought the same determination and work ethic that lead to great success in his previous businesses to Loss Mit Services based in East Windsor, CT. His focus, combined with his drive to succeed, have been essential to his success as one of the area's top short sale negotiators.
Known for finding creative ways to overcome hurdles and never ending persistence; Sean, believes in the power of team. Sean and his team are in the trenches everyday, plowing through challenges and objections while negotiating with various lenders, and finding solutions to difficult problems. It is this daily experience that brings Loss Mit Services consistent success and provides them the knowledge to share.
Sean belongs to a number of industry groups and associations that allow him to collaborate, share, learn, teach and stay updated on the latest changes in the pre-foreclosure industry at the federal, state, local and lender specific levels.
Effective Oct 1, 2009 all debt negotiation companies that offer loan modification, short sale, or foreclosure rescue services needed to be licensed by the CT Dept of Banking. Sean and his company Loss Mit Services were the 1st to be awarded the Debt Negotiation License NMLS # 828273 which can be verified at the CT Dept of Banking Website by Clicking Here. In addition, effective Oct 1, 2011 Debt Negotiators were required to also be licensed Mortgage Loan originators and Sean also has received this license, NMLS# LO-831853.
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