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Posts Tagged ‘buying a short sale’

Oakland County MI Real Estate

A short sale is when the house is offered for sale by the owner (person as opposed to a bank) who owes more than what is owed. Once an offer is accepted, the bank has to agree to reduce the mortgage payoff. Usually some of the leg work has been done before the house ever hits the market, but there’s only so much that can be done prior to getting an offer. I have had answers back on short sale offers as quickly as a few days (this is VERY rare), but typically it takes 3-6 months to get an answer back on an offer, and sometimes that answer is just “no” with no counter.

If you need to get into your Oakland County home right away, looking at short sale listings is probably a bad idea. If you have time (and patience) you can usually get a pretty good deal on a short sale listing. It benefits the bank to take their loss now rather than wait and incur the costs of foreclosing. Short sale is also a searchable field in the multiple listing service (MLS) I belong to. Oakland County MI short sale listings can be searched or excluded from searches.

WARNING:

  • Short sales are not for the faint of heart
  • There is no guarantee the short sale will be approved
  • There is no guarantee if the short sale IS approved that it will be at the price agreed upon by you and the seller- SO be prepared for a counter offer
  • Do not even look at short sales if you are under any kind of time constraints!!

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What to Expect From Your Oakland County Buyer’s Agent

Financing Your Oakland County Home Purchase

Buying an Oakland County Foreclosure or Short Sale

Jackie Hawley, Realtor
ReMax Encore, Clarkston MI

Cell: 248-736-6407

Jackie@JackieHawley.com

www.MiRelocation.com

www.MacedayLake.com

www.OaklandCountyMichiganLakes.com

www.LakeOaklandHomes.com

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Making an Offer on an Oakland County Michigan Short Sale Listing? The Asking Price Means Nothing!

First a quick run down about how the short sale process works. Owner lists a house with a real estate agent. The owner owes more on the house than he can sell it for and is either unable or unwilling to bring the short fall to the closing, so it is listed subject to short sale approval. The banks do not pre-approve houses for short sale and the banks do not set the asking price.

The point is, the seller and his agent set a price to ask for sale and it has nothing to do with what the bank (or banks) will take for a pay off. I know how I price a short sale listing, but every agent is going to have their own ideas of what works best. Some agents appear to have no rhyme or reason behind their pricing. When considering buying a short sale listing, one of the factors to consider is the abilities of the listing agent. He or she is a major component to getting a favorable approval.

One of the myths floating around out there is that the banks will approve anything. There are some great deals, but they exist in all types of sales: short sales, foreclosures and regular sales. But I can honestly tell you that is a rare to non-existent happening that a bank will approve a payoff of $50K for a house worth $150K in this market and owes $300K. Something IS NOT necessarily better than nothing. The banks aren’t going to just forgive debts because it’s the easiest thing for sellers and real estate agents. In Michigan the banks have 10 years to come after the deficiency, and if they don’t release the seller from that deficiency there isn’t much incentive for the seller to approve the short sale and continue to closing.

Short sale listings tend to sell at the low end of fair market value and even slightly under today’s fair market value. And they should if you consider a 6 month wait on the part of the buyer to even find out if they can buy the house. I like to equate that wait and uncertainty to sweat equity. But the current asking price has absolutely nothing to do with the final sale price. It is very possible/likely that you will wait it out and the short sale gets flat out rejected. Or you may get a counter offer. During that time you hope interest rates don’t go up.

Before we make an offer on a short sale listing, I will do a detailed market analysis on the house. There’s no need to make a low offer that you can’t or won’t move off of if the bank won’t accept that low of a pay off. There’s also no need to make an offer so high that your lender won’t approve the mortgage due to a probable low appraisal.

I have a series of blog posts about buying a short sale listing. Some about the downfalls as well as the perks to buying a short sale listing. After reading the posts outlining the good and the bad, if you are willing and able to still pursue possible short sale listings, there are more posts about negotiating with a short sale seller. The incentives for a short sale seller are very different than those of a traditional seller.

Jackie Hawley Keller Williams Realty, Clarkston MI

Cell: (248) 736-6407

Jackie@JackieHawley.com

Buying Real Estate In Oakland County Michigan

Writing the Offer

Financing

The Home Inspection

Foreclosures and Short Sales 

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Buying an Oakland County MI Short Sale Listing- What to Expect

Between what I’ve heard on TV and radio, read and from conversations I’ve had with clients, potential clients, other agents, relatives, friends… I have learned that there are a whole host of definitions for the term “short sale.” And most of them not very accurate.

A short sale is when the house is offered for sale by the owner (person as opposed to a bank) who owes more than what the house is worth and can’t, or isn’t willing to, pay the difference themselves. Any offer that home owner would accept would be subject to the bank agreeing to reduce the mortgage payoff. Selling short. Short sale.

Short sale listings can be some of the best bargains available in Oakland County Michigan, but there are things about short sales that the Oakland County Michigan home buyer should be aware of prior to even looking at houses.

  • Be prepared to wait 3-6 months (sometimes longer) for short sale approval
  • Be aware the lien holders may not agree to the payoff required to proceed with your offer. After 3-6+ months your offer may be countered or outright rejected
  • Don’t expect appliances to stay
  • Don’t expect the seller to pay for repairs
  • Don’t expect your closing costs to be covered in the form of seller concessions- sometimes they’re capped at 3% and sometimes they won’t be covered at all
  • DO expect to close pretty quickly once the short sale is approved

One of the first things everybody involved in a short sale needs to understand is that the banks are under no obligation to approve a short sale. You would think it would be in the banks best interest to approve a short sale when the offer is reasonable, but often times the actions of many of these banks seem to defy logic. Also, the more lien holders involved in the transaction the more difficult it is to complete and the higher the probability that it won’t close.

Buyers need to realize that there are factors beyond the control of the buyer or buyer’s agent.

  • We can’t control how cooperative the seller will be with the bank’s demands addressed in more detail here
  • We can’t control how knowledgeable or diligent the listing agent is
  • We don’t know from day-to-day what financial incentives the government will offer the banks which can determine what short sales they approve
  • When there are multiple mortgages we don’t know how well the negotiators for the first and the second will play together or the abilities of the listing agent to ref them
  • The seller can also reject the terms of the short sale which will be addressed in detail in another article

In a nut shell– short sales can be a good bargain but for the right buyer. You need to have the patience of a saint and the ability to move on someone else’s schedule.

What if the Appraisal is Low?

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Property Taxes and Your Home Purchase

Is the Appraisal for Your Protection?

Jackie Hawley
Keller Williams Realty
Cell: (248) 736-6407
Email: Jackie@JackieHawley.com
www.MiRelocation.com

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What is a Redemption Period?

In Michigan, once you get behind enough on your house payments for the bank to take action (usually after a few months- sometimes longer) you will receive a notice of foreclosure. On that notice there will be a date for the sheriff’s sale. That usually takes place within 30 days for so of the notice of foreclosure.

At the sheriff’s sale the house is usually “bought” by the primary lien holder. Sometimes they purchase it for the amount of the mortgage. Sometimes they pay closer to fair market value. The home owner then has a period of time to “redeem” the house (pay off the mortgages)- thus redemption period!

In Michigan the redemption period is 6 months if the house is on less than 3 acres and 12 months if the house is on 3 or more acres.

This is important if you are looking at a house offered for sale with a short sale contingency. If the house is on less than 3 acres and the sheriff’s sale was 5 months earlier, there is a very good chance the seller won’t get a short sale approved in that 30 day time frame. Yet another reason to use an experienced, full time agent to represent you when buying a house in Southeast Michigan.

Buying a Short Sale

The Nuts and Bolts of Buying a Southeast MI Home

For Southeast MI Home Buyer

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short sale listing agentWhether buying or selling a short sale in North Oakland County or Lapeer Michigan, the abilities of the listing agent are very important. From the seller’s perspective, they need an agent who is very careful and precise with pricing. The seller needs an agent who knows which offer should be accepted and which should not. An agent who will not only get the short sale approved with the first offer, but approved with terms that are acceptable to the seller.

From the buyer’s perspective the seller needs that same agent I just described above. With a lesser agent your offer may never make it to the closing table and you can wait 5 or 6 months only to be told “too bad, so sad you’re not getting the house.”

So- back to the question in the title of this post. What makes a good short sale agent?

The same things that have always made an agent a good agent. A short sale is just another contingency that needs to be cleared in order to make it to the closing table, albeit more difficult to accomplish than most contingencies. In the past, the sellers didn’t always know they were being short changed when they hired an incompetent agent. And the buyers were ecstatic if they could pit their good agent against a lousy listing agent; it just meant better price or terms for them. Now, the abilities of the listing agent are much more determinant to the outcome of the transaction- whether the closing happens or not.

A good agent in any market is detailed oriented, full time, knowledgeable, honest, available (not 24/7short sale listing agent experience counts available, but a person who answers their phone or returns calls and emails in a timely fashion). Experience helps immensely but a newer agent can also be a good agent. But all things being equal except for the experience factor, experience should trump new. And beware! Short sale designations DO NOT make an agent a good agent. Designations are easy to get and even if an agent had a PHD in short sales (if one existed) that doesn’t mean they are detail oriented, full time, honest or available. It doesn’t even necessarily make them knowledgeable. It means that sat through some classes.

Oakland and Lapeer County seller: If you need to sell and include a short sale contingency, please please please carefully choose the agent who will represent you. There is no need to go through the motions and take up a half  year of your life to just face foreclosure.

short sale agent honesty is importantOakland and Lapeer County buyer: If you are willing to put looking at homes on hold for 5 or 6 months while you wait for lender AND seller approval of the short sale, don’t you think the ability of the listing agent affects you almost as much as it affects the seller? If the sale fails you won’t be looking at a foreclosure like the seller might, but you could be looking at rising interest rates and rising home prices which could be a significant amount of money to you in the long run. Are you willing to put that much of your financial future into the hands of a listing agent who doesn’t fill in the lake name or the acreage search field? Are you willing to put your financial future into the hands of an agent who fills out the MLS remarks with something along the lines of “subj to short sale approval. commission 50-50” and no mention of the professionally finished walkout or the custom kitchen or the heated pole barn. Are you willing to put your financial future into the hands of an agent you you have not met nor had an opportunity to interview, but an agent who only puts 1 or 2 photos in the MLS when we are able to put 25 photos in the MLS? If that agent is that sloppy or non-committed to getting the listing sold during the easy part of the transaction- inputting into the MLS- what kind of a job is that person going to do when it comes to the actual work of negotiating the short sale. And remember- that is a short sale with terms acceptable to BOTH the lender and seller.

Buyers- The Importance of a Good Buyers Agent

Sellers- The Nuts and Bolts of Selling Your Home

Sellers- Marketing Your Home

Buyers- Everything You Need to Know About Short Sales

Seach the MLS 

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Oakland County MI Home Buyer- That Short Sale Approval is Also Subject to the Seller’s Approval of the Short Sale Terms

gambling on short sale approvalShort sales have been on the rise in North Oakland County MI over the past year. Short sale closings in Lake Orion, for example, more than doubled in 2010 from 2009– from 32 to 74 short sale closings. Often times a short sale is a terrific deal. They have to be for the hell they put everybody through. There is typically a 5 or 6 month wait to even find out if the bank will approve the short sale. And if the bank does approve the short sale the seller will usually have to approve the terms the bank offers them.

Most listing agents of short sale, good or bad agents, will insist on a clause in either the purchase agreement or an addendum, stating that the sale is contingent upon seller and lien holder approval of the short sale. If the listing agent doesn’t demand something along those lines in the offer then they shouldn’t even have a license. So there is really no getting around the fact that the seller needs to approve the short sale terms.

When I represent a seller, one of the conditions I fight for is to have the bank(s) agree to release the seller from liability for the deficiency. Basically I insist the bank put in writing that they won’t sue my seller for the short fall. I am an experienced agent and have been successful for the past 19 years. Every listing agent isn’t as good as I am (or as humble). I prepare my sellers that they may have to cough up some money or sign a note, or both in order to get the banks to agree not to sue them. Not every listing agent is going to prepare their seller for this possibility (probability).

The facts are, if you make an offer that is accepted by the seller, and one of the contingencies is a short sale must be approved by the bank(s) with terms the seller can accept, there is a very good chance the house will never close if the listing agent isn’t a very good agent. In the meantime you will have sat around waiting and hoping interest rates don’t go up too much and hoping that property values don’t go up too much (and they HAVE started going up), and hoping that some agent you know nothing about can get a very difficult job done to the satisfaction to both the bank AND the seller.

And if that agent can’t get the job done, then you get to start all over again.

Short sales are NOT for the faint of heart or for anybody on any kind of time line to move. Before you start looking at homes, you need to have a long talk with your agent to decide if you even want to look at short sale listings.

Buying a Short Sale Listing

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Homes for Sale in Oakland County MI

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Buying a Short Sale in Oakland County Michigan

Since at the current time my categories and tags are a mess I thought it would be a good idea to have all my posts about buying a short sale in one place- hence this post. Below are links to blog posts I’ve written about writing an offer on a short sale, some tips to help make the process go smoother, and what to expect.

Short sales are not for the faint of heart. It will usually take 3-6 months to even know if the seller’s bank(s) will approve your offer. The seller has different motivations than with a normal sale thus negotiation tactics will be different with a short sale than with a regular sale or foreclosure sale.

The first link is for a post covering the basics of writing an offer on any Oakland County or Lapeer County Michigan Home. The rest of the links are more specific to short sale listings.

Writing an Offer on a Southeast Michigan Home

Short Sales in Southeast Michigan- What to Expect

Buying a Southeast Michigan Short Sale Listing- Negotiating Tips- Part 1 of ?

Buying a Southeast Michigan Short Sale Listing- Negotiating Tips- Part 2 of ?

Buying a Southeast Michigan Short Sale Listing- Negotiating Tips- Part 3 of ?

Short Sales and Seller Concessions- Important Update!

“Highest” and “Best” are Not Synonyms

Contingent Offers on Distressed Sale Homes

Southeast Michigan Short Sale Buyer- Beware the Flopper

Please don’t hesitate to contact me if you have any questions or are in the market to buy a house in Oakland or Lapeer County Michigan.

Jackie Hawley
cell: (248)736-6407
Jackie@JackieHawley.com
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