Ok, I’ll admit. I LOVE short sales. LOVE LOVE LOVE THEM. I know I’m in a vast minority. Not everyone loves the challenge, nor can rise to the occasion. I TRULY love short sales in Massachusetts and while most people give the eye roll when I say we are an attorney state, I think most of the time it works to our advantage. I mean in New Hampshire you sign a purchase contract FIRST and THEN iron out details, but in Massachusetts you can sign an OFFER first which stipulates the DETAILS and THEN sign your purchase contract. It’s a beautiful thing.
The problem I run into is some of the agents I’ve spoken to seem to fall over backwards when I tell that inspections should be done within 5-7 days of signing the purchase contract. It’s as if BECAUSE it’s a short sale, it’s treated “differently” than a traditional sale. NOOOOoooooooo. This is the ABSOLUTE WRONG premise.
First, keep in mind we are hired by the sellers, so my job is to protect them. Most of the time the selling agent has referred us to the homeowner, and we’ve worked out many of the details of the transaction long before the first offer comes in on the property. I LOVE Realtors who “get it” – Realtors who list a lot of short sales “get it”, but there are some agencies that teach short sales…well…backwards.
Last week I got a call from an Andover, Massachusetts real estate agent, who was interested in referring us to her homeowners. She didn’t like short sale and then when I explained that we make sure inspections are done up front, she seemed to think buyers would never go for it. First, give buyers some credit. If they like the home enough, they will usually work within the parameters the seller set for the sale, but more importantly you CAN’T wait for the short sale approval and THEN get the home inspected or you could likely jeapordize the sale. Here’s why. Let’s say we negotiate a sale, and God forbid it takes 5 months. This could be sale that has gone back and forth with counters, multiple BPO’s, appraisals, etc., and then when the waters part, we get that nice approval, full deficiency release and then read we have 3 weeks to close. Well, let’s say, the buyer is FHA, the inspection process is pretty grueling and can take up to two weeks, which leaves you ONE week for it to get to underwriting and pass the many OTHER requirements the buyer’s lender set forth. It won’t fly. What if the SELLING lender is nasty and says, “Listen, we’ve given you FIVE months to get your financing, inspections etc., in order and all you are going to get is this three weeks to close,” then what? Ok, upon inspection you find a faulty heating system, or mold, or a Title V that won’t pass, you may have a SLIM chance to go back to the seller’s lender and ask for a reduction or change terms of the approval. WHY WOULD YOU WASTE YOUR TIME? WHY WOULD YOU WASTE THE SELLERS TIME? WHY WOULD YOU WASTE THE SELLING LENDER’S TIME OR YOUR AGENTS TIME? GET YOUR INSPECTION DONE UP FRONT BEFORE the purchase contract is signed and that way if there is a significant problem you can adjust your price before you waste anyone’s time.
Get your offer solid, and in order if you are serious about the property. The agent I spoke with said she works with buyer’s that go around making multiple offers on properties. Other than an investor who is looking to buy multiple properties, that doesn’t fly. If you are making multiple offers on properties, then you are HARDLY committed to any ONE property. Get your inspection in order, get your financing in order and a commitment within 45 days and you’ll have a MUCH higher success rate of getting your offer accepted. BUYERS SHOULD HAVE THEIR INSPECTIONS DONE LONG BEFORE SHORT SALE APPROVAL SO THERE ARE NO SURPRISES. You don’t want ANY hold ups at closing. Once the approval is issued, you need to get to your title agent and get closing scheduled ASAP, NOT get your inspection done..NOT get your financing in order then.
Maryann Little, VP Short Sale Mitigation (negotiations)
Massachusetts, New Hampshire and soon to be Maine
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