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Posts Tagged ‘oakland county mi short sale’

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

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Thinking of Buying a Short Sale Listing? A Few Things to Consider

oakland county mi short saleThe amount of short sale listings in the North Oakland County and Lapeer MI area have been on the rise over the past several months. I believe this is happening for a variety of reasons. More agents and attorneys are pushing the benefits of selling via the short sale route over allowing a home to go into foreclosure. Homeowners are hearing the term more often and assume it’s better for them in the long run. Unemployment in Michigan is still high and people are still losing their homes, and for whatever reason more are opting to sell short rather than allowing the house to go into foreclosure.

What does this mean for you, the home buyer? Short sale listings tend to be in better condition than bank owned homes- not always but often. Short sales tend to be good deals, but honestly everything that is selling is a good deal. The regular homeowner/seller has to price their homes like a foreclosure or short sale in order to 1) find a buyer and 2) appraise for that buyer’s mortgage.

The easiest transaction tends to be with the regular homeowner/seller. Bank owned sales tend to be fairly easy to deal with. You may have to wait a little longer for an answer than with a normal seller and you will need to sign a bunch of addenda from the bank/seller and you DO have to sign them and you CANNOT change them.

Short sales– They are a unique animal unto themselves. First you make an offer to a homeowner who will accept, reject or counter. Once you come to terms, that seller will submit the offer to the bank(s) that has the current mortgage(s) on the house and ask for them to reduce the payoff amount(s) to match your offer amount. There is quite a bit more the seller needs to do, but from your perspective this is what basically happens.

Now you wait for 3-6 months. At the end of that time frame the following can happen:

  • your offer is outright rejected
  • your offer price is countered
  • if you asked for the seller to pay some or all of your closing costs those may be countered
  • if you asked for the seller to pay some or all of your closing costs those may be eliminated
  • the offer may be accepted but the seller may need some cash in order to be able to go through with the sale

When it comes to closing costs the banks, in my experience, rarely/never allow more than 3% of your costs to be covered. Often times they eliminate that part of the offer entirely. If you NEED to have your closing costs covered you shouldn’t look at short sales. We aren’t dealing with a logical being at the other end of the transaction. I know that you are really mortgaging those costs. I know that you would have offered 3% or 6% less if you weren’t asking for those costs to be covered by the seller. You can even offer to raise your offer amount and you will probably get shot down.

Sometimes the short sale will be approved but ask for the seller to bring cash to the closing- cash they probably don’t have. The seller may offer to sell you appliances, lawn tractor, etc to cover that cash needed to close. If you are tight on cash to close, you probably shouldn’t look at short sale listings.

How will you feel if you wait 6 months only to have your offer rejected or countered in a manner that keeps you from being able to buy the home and in the meantime the interest rates go up? What if in 6 months the interest rates are 1/2% higher? Or 1% higher? Do you know how much buying power you just lost with that size of a hit?

For More About the Home Buying Process Please Contact

Jackie Hawley
ReMax Encore, Clarkston MI
cell: (248)736-6407
email: Jackie@JackieHawley.com

Buying a Short Sale Listing

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Photo courtesy Kate Ter Haar, Flickr Creative Commons

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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

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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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