In today’s Metro Detroit real estate market, there is almost no way a prospective buyer cannot run into a few short sale properties or foreclosures during a home search. Each is much different from a standard “retail” home purchase where you are working with Susie and Sam Seller, their agent and your agent.
In a short sale you have at least one other interested party: the bank. Quite often you have two banks if there is a first and a second mortgage. You may also have bankruptcy courts and lawyers, but we will leave those for another post.
- Typically, your first round of negotiations is with the home owner. Once they have arrived at a written agreement with you, they will submit a short sale package to the bank(s) for consideration. A complete short sale package will include things like your offer and preapproval, a current CMA, the seller’s financial statement, hardship letter, tax returns, a seller’s net sheet and w2’s.
- The bank(s) will send out an independent agent to provide a broker’s price opinion. This will give the bank a better sense of if the offer is reasonable or not.
- You will usually have a lot of waiting and uncertainty to deal with. Hopefully your patience will be rewarded with a speedy approval, but be prepared for a wait.
- The bank can counter the offer you have with the seller. If they feel the property is worth more, they might ask you to come up in price.
- Some sellers will continue showing the home and presenting other offers to the bank after they have accepted yours. Have your agent ask the seller’s agent what he plans to do once your offer has been accepted just so you know.
- If a sheriff’s sale is scheduled while your offer is being reviewed, the listing agent can ask to have it postponed until after your closing date.
- If the sheriff’s sale has already taken place, you need to close before the redemption period expires or the deal is off.
- The listing agent is very important in a short sale. She will be contacting the banks on regular basis for status updates and to keep the file moving. I have been known to call a couple of times a day. Or fax. Or email. Or all 3…
- The seller may have some extra emotions associated with this sale since it has likely been a stressful experience. They’ve probably been dealing with the bank and difficult personal financial issues for months.
- I typically write my buyer’s purchase contracts so that they do not have to pay for things like home inspections or appraisals until AFTER the bank has provided approval.
- The reward can be worth the wait for those buyers who have the patience and nerves.
I’ve learned a lot from each short sale we’ve completed. Every bank is different. Every loss mitigation officer is different. Most are overworked and underpaid. Being nice, and presenting a complete package go a long way.
Short sales are here to stay for a while. You can steer clear, if the uncertainty is not for you. Or dive in with your eyes wide opened if you’ve found the home you want.
PS. Dmitry and I have attended numerous training courses on short sales and we are short sale certified. If you are a Oakland County home seller in need of a short sale, we may be able to assist you.
Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
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Steven Zylstra 07.23.09 at 12:44 am
My wife and I have placed an offer for a short sale through our agent to the agent of the homeowner/bank, as the bank has possession of it I think. We did this 2.5 months ago and have been told ours is the best and no new offers can be made. The offer/transaction is waiting for a reviewer. Do you have any advice for me? I live in the Grand Rapids area.
Jerry 08.03.09 at 1:34 pm
I’m a potental seller and considering doing a short sale on my home I was renting out to keep up with the payments while I’m now working and living out of town. Do you have to get a lawer to start the short sale process with the lender or would I just go directly to my mortgage company without an attorney? I’m not sure how much negotiating would be needed if any with the mortgage company. I trust my lending company …. I think …. or should I? I’ve had the home for 14 years and in the Michigan market, I’m lucky if I’m at the break even as far as what I owe on the loan. I would probably have to say I’m heading toward it being worth less than what I owe or very close to it.
mitchell -Bridget 08.20.09 at 9:06 pm
my husband and I have put an offer on a short sale about the begning of may. i offer have been selcted be we our still wating for the bank to get back with us it is know going into the begning of september. also our agent never calls us let us know what’s going on we always have to call her. we our thinking about another agent. should we continue to wait or keep shopping around. thanks for your feed back. from new heaven MI,