BUYING AND SELLING EDWARDSVILLE AREA SHORT SALES
We get a lot of questions about short sales. From the basics, "What is a short sale?" To the unanswerable, "Why does it take so long for the bank to approve my short sale?"
This blog post will give both buyers and sellers in the Edwardsville, Glen Carbon, Maryville, Collinsville and Troy areas enough information to make some decisions about buying a short sale or working with a Realtor to short sell your property.
BUYING A SHORT SALE HOME
Are you armed with buckets of patience? That is the first questions we always ask buyers who tell us they want to work with us as buyer's agents to purchase a short sale home.
If the answer is an outright "no" or if the buyer has to be in a new home by a certain date, we suggest that they are not the ideal candidate to purchase a short sale. We can find you other affordable homes in Edwardsville, Glen Carbon, Maryville, Troy, Collinsville and beyond in Madison and St. Clair counties, but short sales take a tough and long-term mindset. Look at it this way, we want to make sure you are happy and that you don't make choices that waste your own time.
In addition to being patient enough to wait for as long as six months (and, let's be real, sometimes longer) to close on a short sale purchase, you should be ready to make an offer that is "clean," meaning no contingencies (such as the sale of your current home)or other demands that would result in denial by the lender.
After we show you available short sales and you zero in on the home that appeals to you, we'll do the comps. That means we will perform detailed research on recent comparable sales to make sure the target house is worth the price you're offering.
We'll work with you to formulate an offer that makes sense and we'll submit that offer to the home owner. Wait! Why don't we just submit it to the bank? Because the contract is between you -- the buyer -- and the home's owner who is selling his property. The lender will approve the short sale (or deny it), but is not party to the sale.
This is when the "patience" portion of buying a short sale comes in. We will submit your offer to the seller. He will accept (we hope) and you will be in contract on the home. The seller's agent will then take the fully executed contract, the seller's short sale package (see below) and submit everything to the lender. And then we all wait. Note: We will need your lender pre-approval and a check for earnest money, just like a normal transaction, to make a successful offer. Be sure you're pre-approved for your purchase loan before shopping for a short sale.
What's going on while we wait? Much of what will happen now is in the hands of the seller and the seller's agent. Continue reading to see what's going on over on their side of the transaction.
SELLING A SHORT SALE HOME
First, with the massive number of American households upside down in their mortgages (meaning you owe more on your home than it is worth in the current market), you must understand that there is no shame to conducting a short sale of your property if you are suffering a hardship and can no longer afford the home. The shame is in ignoring your situation and allowing your lender to foreclosure.
What is a hardship? It could be loss of a job or relocation for a job or reduction in your income. It could be divorce or medical bills or death of a spouse. A hardship is something outside of your control that is making it difficult for you to keep up with your mortgage payments.
When we meet with you, we will bring paperwork that your specific lender will need to open your short sale file. That includes an authorization letter allowing your lender to talk to us as your agents. We will help you create your hardship letter which will explain your situation to the lender and we will work with you to complete all of the required paperwork.
Each lender has different guidelines, but most will also require your last two pay stubs, bank statement(s), monthly income/expense statement, a HUD-1 (which will explain what the bank would net on a short sale), two years of tax returns and two W-2s. We will do the research on comparable sales to show the bank the evidence of recent prices in your area.
Then we will market your listing to the widest possible pool of buyers and their agents. It will be entered into the MLS, posted to websites and advertised in a variety of ways.
Once we have an offer to purchase, we will go over the offer together and you wil determine if you would like to accept it.
When we have a fully executed contract between you -- the seller -- and the prospective buyer, we will gather your short sale package items and send the offer along with the listing agreement, the comparable sales (again) and anything else the lender demands. You as a seller also must be patient. The lender may ask for the same paperwork multiple times. We will smile and send it. Again and again if necessary.
The lender will acknowledge receipt of the package at its leisure. Then they will assign a negotiator who will order a BPO. A BPO is a Broker Price Opinion which means that another area broker or agent will visit the target home to determine its value. The lender will seldom share that BPO with anyone, but you may find the lender coming back and demanding a higher price for the property if the BPO comes in higher than your comps. (We can fight the BPO if our comps and its outcome are out of whack.) None of this happens at a pace that most people would consider normal.
Its likely at some point in this process we'll be assigned a new negotiator from the lender which may or may not require resubmission of some paperwork. All parties to the sale will also be asked to sign an Arm's Length Affidavit which states a legitimate short sale is being conducted and that no one in the process is committing mortgage fraud or selling the home to a friend or relative who will allow the seller to continue to stay in the home.
If the planets are aligned, the lender will approve the short sale, forego a deficiency judgement against the seller and allow us to schedule a closing.
Enjoy life in the (618) area code in Southwestern Illinois, St. Louis' Illinois suburbs. SEARCH FOR HOMES HERE.
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I help good people buy and sell good homes in St. Louis' Illinois suburbs, with special emphasis on the Metro East communities of Edwardsville, Glen Carbon, Maryville, Collinsville, Troy and surrounding areas in Madison County, Illinois.
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For more information or to search for homes, visit my sites at NancyMilton.com, 618Life.com, or GoshenRealtyGroup.com or send an email to me at Nancy@GoshenRealtyGroup.com. Text or call Nancy Milton Holtzscher, your Edwardsville Realtor, at 618-791-8007 any time.
REMAX Preferred Partners is located at One 157 Center, Edwardsville, IL 62025, 618-791-8007 (direct) 618-655-1188 (office). We're easy to find on IL-157 in Edwardsville between Pasta House Co. and Shenanigans. Each office is independently owned and operated.