10 Questions that Buyers asked when buying a home on a Short Sale

Q: Does the loan have to be in default in order to buy on a short sale?                                                                                                      

A: No, the Seller does not have to have their house payments behind. 

Q: How long does a Short Sale take from start to finish?

A: A typical Short Sale takes anywhere from a month to 6 months depending on the Bank, what the offer is, and how organized the Listing Agent is. 

Q: How does a Bank benefit from selling on a Short Sale?

A: What some Banks don’t realize is that the cost to foreclose on a Home is about $15,000 to $40,000 depending on the Attorney, what repairs are need to bring the property to FHA or VA standards, utilities,  other clean ups and marketing costs from the Realtor they Hire. That doesn’t included the amount they have lost from the original loan balance to the new purchase price.

Q: If I buy a Short Sale are there any fees associated with    buying one.

A: No, there are no special fees you will have to pay for buying a Short Sale.  The bank will eat the loses from the Seller.

Q: Can you still get the same kind of rates

A: yes

Q: I have a friend of mine who wants to sell me his house on a Short Sale, can I buy it without using a Realtor?

A: No, most banks want a listing agreement from an Realtor when a new buyer has made an offer.

Q: How much can you ask the bank to pay on closing costs?

A: The most I have seen a Bank pay towards closing cost is 3%

Q: Is it better to go through the agent that has the property listed.

A: No, the agent does not have a say on what the banks bottom line is. Most Buyers think the Agent can discount the commission if they represent both the Seller and Buyer but in reality the Bank just offers less to the Agent and the net to the Bank is higher.

 Q: What is needed before I make an offer on a Short Sale?

A: A pre-approval letter. Most banks want this with the offer.

Q: What is the difference between Short Sales and a Foreclosure?

A: A Short Sale is a pre foreclosure. The Sellers still own the property and have control over what the home will sell for and who can live in the property. As of October 2010, Short Sales are becoming harder to buy because the banks are not willing to discount them. At one time they would take 82% fair market value. Recently I have been told by more than one Negotiator from the Banks, that they will not sell for less then what the homes are selling for in the neighborhood. With so many Home Owners wanting to sell on a Short Sale, they have been instructed to not sell for less. Banks don’t want other house values to drop.

If you have a choice, I would recommend buying an Existing Home or a Bank Owned Home due to the fact that Short Sales will take time and in the end, they are not going to discount them. If you need time on your side because you have some money coming to you or you need to sell your home then I would go after a Short Sale.

Foreclosures are homes taken back from the bank after an auction has occurred. They are also known as Bank Owned Homes.  Foreclosures are easier to buy because the Bank’s will give you an answer within 48 hrs. The longer the time the Bank has the home on the market the more motivated they become.  There are certain strategies for buying Foreclosures Homes. You have to make offers at certain times and offer a certain prices. Call today at (801)-589-2437 or email me for more info on how buy a home from a Bank at a discount.

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