May 8, 2012

From the Buyers Side - The Short Sale Process

Just like a traditional or equity real estate transaction, a Portland real estate buyer will make an offer to the seller. And as it is in a traditional sale, the seller may not entertain an offer unless it is written, has earnest monies and pre approval letters included. The seller then accepts, counters or rejects the offer.
Once the buyer and seller finish the negotiations on the terms of the agreement, the home is now short sale pending. In a short sale situation, once the seller has accepted the offer it is then sent to the lien holder (bank).  The seller can accept an offer, only to be rejected or counter offered by the bank.

The bank can take weeks even months to respond. Even though lenders are getting more systematic these days in their processes, there is no timeline for when the banks have to respond. In some cases with offers that are unrealistically low may not have any response of a rejection or counter offer.
While the bank is reviewing your offer, they will continue to market the property. Your offer may be one of several offers the bank will review on this property.  The bottom line is that the bank is trying to limit their losses. In addition, the bank is reviewing not only your offer on this property, but has many other properties and offers to review as well.

Since lenders want good quality buyers, many will require the buyer to be pre approved by them. The buyer does not have to make loan application with that institution (by law they cannot require this), but this is a safety net for them to know the buyer is qualified. Should your other financing fall through you would still be qualified with them and they can move forward to close the transaction.

Many offers will come back to the buyer in the form of a counter offer. The bank may have approved the price, but their boiler plate verbiage is different than most purchase sale agreements. The counter offer must be read very carefully, as it will override the original offer.

The transaction timeline starts when the lien holder (bank) has accepted the offer. Once your offer is accepted, the clock starts ticking your closing date can come quickly. Escrow can close in less than 30 days. The bank has made a determination using that closing date as part of the criteria to move it off their books. The penalty to extend the closing date can be expensive.

The seller and lien holder must provide clear title to the property at closing.  Since financially distressed sellers do not always realize the extent of their obligations, they may not understand the process and that they most convey clear title. The seller may have back child support, alimony, tax liens, or other attachments to the property, they all must be paid off to give clear title.

Every short sale transaction is unique, just like traditional sales.  Patience is the biggest challenge area for buyers in a Short Sale transaction. 

 

Rich Peralta is a real estate professional in the Portland Metro Area, including Lake Oswego and  West Linn Real Estate.

He can be reached at 503.961.2181 or by e-mail at rich.peralta@exprealty.com

Contact him  for more information on Portland,  Lake Oswego or West Linn Real Estate!

 

Originally posted on West Linn Real Estate.

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