Category Archives for "How to Buy a Short Sale"
A Charlotte Short Sale is getting easier to purchase. According to RealtyTrac, 2010 is going to be the year of the short sale due to the large number of pre-foreclosure properties on the market. It is estimated that one in four US homeowners owe more than their home is worth. Now could be a good time to consider purchasing (or selling) a short sale as future home prices are expected to increase 9-12% in 2011. Simply put, this could be a great time to buy a Charlotte Real Estate Investment.
One of the biggest challenges in a short sale has been the time it takes to close a transaction. The challenge in completing a Charlotte short sale has been twofold: 1) getting the buyer and seller to agree and 2) getting the bank on board to agree to sell the home for less than the purchase price (and thus take a loss on its loan). It can be especially hard motivating a bank to sell if you do not have experience negotiating with banks.
But our team is beginning to see turn-around times decrease in a Charlotte short sale transaction. Communication with banks has improved, and so has the technology involved in processing short sales. A new technology platform called Equator has been rolled out by banks to facilitate processing of paperwork involved in a short sale transaction.
Also, banks are beginning to see that a short sale is in their interest. The bank makes on average 30% more from a short sale when compared to a foreclosure. An added bonus in a short sale is the condition of the property. Charlotte foreclosure homes are often trashed and subject to vandalism since these properties have been abandoned, but a short sale home is often occupied by the owners until the closing.
Banks are responding quickly to offers due to enhanced technology, but banks are also more receptive lately to aggressive offers from buyers as the number of homeowners underwater increases. Also, the implementation of HAFA (Home Affordability Modification Program) has provided incentives to the sellers, buyers, and the banks that will make a Charlotte short sale smoother.
Given that the market is finally moving in the direction of buyers, you may want to consider a short sale, especially in a Top 10 Market like Charlotte.
In the second part of our series on getting the perfect home in a short sale transaction, we will discuss the negotiation process. Based on your solid preparation, you are ready to make an offer on the home of your choice. Remember, though, that a true negotiation is a give and take process. Here’s what we mean.
The goal of this whole negotiation, from your point of view, is to get the best price possible. Preferably, your goal will be to get the short sale property below its “fair market value.” On the other side of this negotiation sits the seller who has to move a piece of property in order to pay back the lender. Typically, short sale sellers realize they will be taking a price that is less than what is owed on the property, as overall devaluation of property has caused this reality. So, the new goal is to try to get at least the new fair market value of the property.
So, as you can see, getting the perfect short sale home will involve some give and take. Typically, your first offer will be very low. The seller’s counter offer will be too high. From here, the winner of the negotiation will be the one who makes the best case for establishing what the “true fair market value” of the property really is.
This is where your Realtor will come into play. By using tools like comparison sales, independent appraisals, and Broker Price Opinions, your Realtor will help you make the case that your particular property is not “typical” of similar homes that have sold in the area. They can help you establish a case for the need of repairs for the property, especially if those repairs help to bring a property up to code for the area. The bank will always assume the position that the house is fit for sale “as is,” and that the property is worth the fair market value they have established. The proverbial “burden of proof” will be on you and your Realtor. Realistically, though, you should be able to make a good case, in most circumstances, for a 15 percent discount on the fair market value. You might even be able to negotiate even more of a discount if the property has set for a while. Patience may work on your side.
Getting the perfect short sale home will involve being able to show a case for the devaluation of the home’s price. It will also involve taking control of the real moving target in this deal: the fair market value. Getting a good Charlotte Realtor that has a winning record in this type of short sale negotiation could pay off handsomely.
With the current economy still looking rough for the real estate market, it may be time for you to buy a bank owned property via a short sale. But getting the perfect short sale home is going to take some planning. In this first of a two part series on buying a short sale home, we will discuss the preparation needed to complete a short sale transaction. In the second part of the series, we will discuss the negotiation process.
The best possible outcome will almost always happen when you work with a licensed Realtor. Many people understand the mechanics of the short sale, but lack the negotiating experience necessary to get the best deal. Now is not a time for inexperience. Get yourself a Realtor that has some experience in the ebb and flow of negotiating with banks on short sales.
With this key person aboard your team, you can then work together to figure out the price range that will work for you. Don’t get in over your head. Make sure you also understand the commission structure, closing fees, appraisal fees, etc. Being realistic on what you can afford will make the house hunting process easier for all concerned.
You will be looking for property that is in a neighborhood you like. The greatest deal in town will not feel that way if you hate the neighborhood. One good tip is to look for listings that require the price to be agreed upon by the bank. Those are usually homes in pre-foreclosure or foreclosure.
Get a list of “comps” for homes that have recently sold in the area. This may really help to make your case. You will also need to have an estimate done as to any repairs that will be needed on the home. You don’t have to go to the point of an appraisal yet, your Realtor can help you figure this part out. Lastly, try to determine how long a property has been available for sale, and how many price reductions have taken place.
Getting the perfect short sale home starts with having all the details in order. It not only helps you to speed along the sale, but it helps you to look serious during the negotiation process as well.