As an Agent - Make Sure you ID a Short Sale Situation Up-front. Listing Agents Aren't Revealing it. Protect Buyer Clients Who Have a Timeline
Many homes that are for sale in various neighborhoods in the Chicago area, are not occupied anymore - and a number of them are pre-foreclosure or foreclosure properties. Others - will be short sale situations.
Homes that are currently occupied may be listed for a figure where the seller will come up short after paying off the principal balance of their loan(s).
If the seller can't cover the shortfall - it will be a short sale situation - meaning that the lender will have to pick up some of the shortfall.
It is important to note that many agents are not advertising that their listed property will be a short sale in the remarks section of the MLS sheet - because they don't want to dissuade a buyer from writing an offer on the property.
Short sale situations can drag on for quite some time - and many buyers have certain time-lines. Negotiations with the lender about how much of the deficiency the lender will pick up can take time.
If a buyer client wants to get into a home in the next 60 days - it might not happen if they are buying into a short sale situation.
So - it is important that the agent representing the buyer find out as soon as possible from the other side what the seller's equity is (which can sometimes be gleaned from the tax record) at the moment - and if there will be a short sale situation - and if so - how much -- so that the buyer isn't blindsided with delays.
As a rule of thumb - the larger the deficiency - the longer the negotiation can take with the lender.
With any short sale situation - we give the buyer "an out" in the contract - if the seller's short sale negotiations with the lender are not concluded within X days.
Our buyer client can then seek a deal elsewhere.
Homes that are currently occupied may be listed for a figure where the seller will come up short after paying off the principal balance of their loan(s).
If the seller can't cover the shortfall - it will be a short sale situation - meaning that the lender will have to pick up some of the shortfall.
It is important to note that many agents are not advertising that their listed property will be a short sale in the remarks section of the MLS sheet - because they don't want to dissuade a buyer from writing an offer on the property.
Short sale situations can drag on for quite some time - and many buyers have certain time-lines. Negotiations with the lender about how much of the deficiency the lender will pick up can take time.
If a buyer client wants to get into a home in the next 60 days - it might not happen if they are buying into a short sale situation.
So - it is important that the agent representing the buyer find out as soon as possible from the other side what the seller's equity is (which can sometimes be gleaned from the tax record) at the moment - and if there will be a short sale situation - and if so - how much -- so that the buyer isn't blindsided with delays.
As a rule of thumb - the larger the deficiency - the longer the negotiation can take with the lender.
With any short sale situation - we give the buyer "an out" in the contract - if the seller's short sale negotiations with the lender are not concluded within X days.
Our buyer client can then seek a deal elsewhere.
Labels: agent, bank, chicago, chicago illinois, contract, exclusive buyer agent, lender, loan, short sale, short-sale
posted by Rick Hauser at
7:23 AM
1 Comments:
So true! One of my clients (a buyer) is actually in this situation right now. He is purchasing a single family home in the north suburbs, and he didn't find out it was a short sale until after the contract was signed. The real estate agent, who is a dual agent, kept this information to herself. Luckily my clients are not in a rush to move. I've also noticed that some real estate agents are not telling prospective buyers that a property is in the short sale process so as to get the highest possible offer -- that's understandable, I guess, but short sales take so long to get approved by the bank that the buyer may have to back out by that time anyway.
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