A home buying experience is a journey. For Beth, however, it may have been a Safari.
Equipped with Carl Arriaza, Realtor, Four Daughters Real Estate, by her side, they set out to seek and conquer (find a home that not only fit Beth’s needs, budget and location).
Their search focused within the North Shore of Chicago quickly unraveled the challenges of buying Short Sales. Sellers not knowing their situations, listing agents not knowing how to properly advise their sellers, and then the whole negotiating with the banks….Beth and Carl quickly were in for a battle of patience.
The Skinny on Short Sales
Short Sale means the seller is offering a property for sale at a lower price than the amount owed by the Seller, to the bank.
Why would anyone offer a property for less then their mortgage? Because the amount of their mortgage may exceed the “current home market value” within a given area, and buyers will overpriced properties.
Next, a domino effect occurs: If the price of the home is X (lower than the mortgage), the buyer’s offer will be even lower than X, further declining the amount a Bank would consider.
Why would a Bank consider less? Because should the seller not short sell, and the home is foreclosed, often the cost of maintenance of an empty home, lack of monthly mortgage payments, and amount of time a foreclosure takes (1 year +) – the bank is eventually forced to sell for even less, losing more money.
Why are Short Sales difficult?
- During a short sale the homeowner is still involved, and they have not passed their redemption period, making the negotiations challenging.
- Banks are just starting to improve the “behind the scenes” short sale negotiation process, but to date, there is lack of ownership (too many cooks in the kitchen and no one knows what’s for dinner)
- The Buyer’s Offer is often low, and the banks looks to protect them selves by taking time to perform due diligence. They do this through a BPO (Broker Price Opinion) where they send a Realtor to provide idea of value. This takes time.
- A buyer may be patient, but because the flow of information and process may keep some buyers in the dark of extended periods of time, and return responses between 3 – 9 months later, many buyers simply bail out. (There is your consumer Bailout Plan)
- What else? Some people prematurely file for bankruptcy which may cause delays if attorneys aren’t communicating. Divorce situations may challenge seller communication. Listing agent doesn’t have a plan to work on Short Sales, so they simply send, sit and wait like everyone else.
- And much more.
- Any good news? Yes, because the home was currently or recently occupied by the seller, seller may have maintained it, even improved it. Also, the probability of getting an attractive price is likely with much patience.
Now back to the Heroic efforts of Beth. After 9 months and I believe several previous deals, Beth closed on an AWESOME! AWESOME! Home in Arlington Heights. Congratulations to you Beth and I hope your new home brings you many warm new memories.
Also, a quick thank you to Carl for standing by Beth, and not letting the challenges of a difficult deal to ever exceed the importance of our Client’s Feelings and Needs. I know your Landmark Forum studies have taught you many good things, but devotion is something you are born with.
Also, thank you to Neil Kaiser, Attorney at Law and the seller + Listing Company as they were very instrumental is getting this home sold.
Any questions or comments regarding this or other posting please contact us or visit FourDaughtersRealEstate.com