Sarasota 's Exclusive Buyer Agents - Sarasota FL Real Estate & Buyers Broker

If it is a short sale, it just may be.

A short sale is a real estate transaction in which the lender holding the current mortgage agrees that they will accept less than the amount they are owed when the home sells. It has become a buzz word in a market desperate to hear something less disheartening than "foreclosure".
Buyers see the short sale list prices and mistakenly believe that they can absolutely obtain the home for that price, or less. They think that the banks will be thrilled to have the property sold and out of trouble. They think a short sale is a GREAT DEAL.

Yet only a tiny percentage of short sales close. Where is the disconnect?

Problems for Buyers:

1) List price might not be realistic.

Listing agents are given little to no guidance as to what the bank will accept. What to do? Set the price at a level that will get buyers attention! Problem is, very often, buyers find out that the bank won't take that price - even full "list price", which most buyers are loathe to offer in this market.

For instance, a client of mine saw a home they loved, listed for $225K. Knowing this was a great deal for the neighborhood and home, we offered the full $225K with favorable terms for the Seller. We were told the bank would take nothing less than $300K! However, 6 months later, the home is now listed at $199K and has never sold. The list price the buyer sees, in this case, has little to no relevance to what they can buy the home for!

CAVEAT: If a home has an unbelievable price, yet has been on the market for months, or even years, the chances are good that the the bank is NOT accepting offers at that price level.

2) The bank doesn't have to respond on your time line.

I warn all my buyers that the lenders take a very long time to respond. I tell them that even 60 days for a response is standard. They all say they understand. But two weeks later, they are nervous and worried about "why its taking so long".

There are many reasons why the lenders take so long - red tape, bureaucracy, even waiting for a better offer - but its the way short sales go. Many short sales don't go through because the buyers get tired of waiting for a bank response! This is a game of patience and fortitude - you may wait 60-90 days to hear that they are rejecting your offer. And then we start over again...

3) It doesn't make sense. And it doesn't have to be fair.

We know. The banks should be THRILLED that you are offering to buy this property. They should be EAGER to get a property sold instead of in foreclosure. They should be answering you QUICKLY, and selling the home CHEAPLY.

You don't have to convince us; but let's face it - the bank is already facing a loss, in some cases a whopping loss! So they are not particularly eager to let you steal the property, when the next buyer may offer more than you did.

But wait a minute! Can they consider an offer that came in weeks after yours? Yes, they can. And they will, especially if they offer more money or better terms - for instance, a cash offer.

4) Mom was right - there's no such thing as free.

We all know that Sellers are likely to be impacted by the short sale procedure and reduced sales price. What Buyers don't understand is that the very savings they may enjoy may cause tax issues the next year. Consult a tax professional in your situation, but many times the government looks at the shortfall between the full mortgage amount and the actual sales price as INCOME for the buyer, and you may need to pay taxes on that income.

Where We Come In

As exclusive buyer agents, it can be frustrating for us. We truly want to find great deals for our buyers - but the fact is, that after all the waiting, negotiations and reality checks, the short sale may not be the best opportunity for you to get that great deal. And surprisingly, if the Seller purchased at the height of the market (and hence has a mortgage twice what the home is now worth), the chances of getting that home for less than market is slim to none...there are other alternatives for you at that point.

Want alternative options ? Look for bank foreclosures/bank owned properties - they are far easier to negotiate and purchase once the process is complete. Also, don't forget that there are thousands of "traditional sellers" who have enough equity in their home to sell it at a great deal for you - and significantly less drama!

It is our job to find the best properties for you, and we look for those properties that we can REALISTICALLY get for you at a great price.

William@TrueSarasota.com (941) 918-1956