Connecticut Real Estate

There are lots of opportunities for good deals in this market, including bank owned (REO), foreclosure properties, relocation properties, and short sales. In this post I intend to cover my top 5 buyer concerns for qualifying and purchasing short sale properties.

BUYER BEWARE: In the current market, it is important to know whether the home you are considering purchasing is a short sale or not. Simply put, a short sale is when the bank and/or lien holder(s) are owed more on the property than it can be sold for. This may be because the sellers are facing a financial hardship, or it may just be because they are upside down on their mortgage.

To protect yourself as the buyer, the Top 5 Buyer Concerns when looking at short sales:

1 - The seller must have a qualifying hard ship before the banks will even consider a short sale. Simply owing more than your home is worth is not a qualifying hardship. The hardship usually must include the inability to meet monthly financial obligations.

2 - Most banks will not even consider a short sale if the loan is less than 12 months old. Your Realtor can tell you how long the latest mortgage has been in place. If the mortgage is less than 12 months old, you might want to focus your time on other homes for sale. The seller does not have to be in default on their mortgage(s) for the bank to consider a short sale.

3 - If the listing agent is not a Certified Distressed Property Expert (CDPE), or otherwise trained in short sales, and has never presented and negotiated a short sale with a bank before, then statistically speaking, in CT at least, this short sale has less than a 10% chance of going through. CDPEs close, on average, over 80% of their short sale listings. (source: cdpe.com)

4 - Just because the agent lists a property at a certain price, there is no guarantee the bank will accept even a full price offer. I've have personally witnessed short sale listings with qualified offers more than 15% over asking price not go through.

5 - Find out if the listing agent plans to submit more than one offer to the bank, and if they plan to submit an accepted, executed contract or unsigned offer(s). Only get involved with situations where the agent is submitting ONLY ONE SIGNED, EXECUTED CONTRACT to the bank. PERIOD. Anything else is a waste of your time, and lost opportunity as other deals in the market are snatched up while you are waiting.

If you are considering buying a property which is a short sale, make sure you have a qualified buyers representative, like me, who knows their way around short sales. If you insist on working with a Certified Distressed Property Expert (CDPE), then you will know your Real Estate Consultant is up to speed.

A CDPE, like me, will know how to prequalify the opportunity and how to assist the listing agent in preparing a short sale package that has the best chance of getting approved.

Once your offer has been placed, you should know within a short time (days) if your offer was accepted by the homeowner and if it is going to be submitted to the bank(s). Bank approval/acceptance is another matter. You must be willing to wait at least two months for a decision from the bank or do not bother getting involved with a short sale. You should then be ready to close at within 3-4 weeks of notice from the bank of an accepted offer. While we have had some short sale approvals come back in under a week, the average acceptance is 6 to 8 weeks right now.

For a list of CDPE professionals in your area, email me at JMQueenan@FingellyRE.com