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Selling Homes in the East Bay Elisa Uribe 510-485-7272 Opening the Door to Opportunity
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Elisa Uribe

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Are you interested in short sales? Foreclosures? It’s time to ask yourself, are you just looking for a deal?

There is nothing wrong with looking for a deal in Real Estate and there are always deals to be found if you are willing to be patient, and learn all you can before you invest in a property. If you are looking for a deal but do not have time on your side, don’t look for a short sale property. Here is why.


It is not uncommon in a changing market for prospective buyers to call Realtors and say,
“I’m looking to buy a “short sale, can you help me?” Well, if a Buyer needed to close their transaction in less than three months, a short sale would not work. Why? Because once an offer has been submitted to the bank, it may take at least three months for the bank to respond to the offer. The purpose of this blog is to help potential buyers understand the process, and their roll in a short sale transaction.


There are layers of contributing factors involved before a lender determines they are willing to accept a short sale from the Seller, let alone the layers involved in the lenders eagerness to accept the Buyers offer. 


One of the first layers the lender considers in reviewing why the Sellers are not able to make their payments is taking a look at why the Seller is experiencing a hardship. Is it due to a job loss, divorce, illness, job transfer? Have the Sellers requested a package from the banks loss mitigation department explaining to the Sellers what paperwork is required by the bank? In addition to a hardship letter, a lender may ask a Seller to submit financial statements, bank statements, pay stubs, and two years of tax returns in addition to any current asset statements. If the Seller in not organized, or committed to avoiding foreclosure, as a Buyer, writing an offer on this property may be a waste of  time.


Now let’s assume the Seller is organized, and committed to avoiding foreclosure. If the Seller can lower their debt enough to sell the property without adding cash, and the lender is committed to avoiding a bank owned property on their books, and there is a qualified Buyer willing to purchase the property a short sale will work. Usually a lender will not consider or agree to a short sale until a qualified buyer with a specific written offer is presented to the lender along with the Sellers documents.


Now, let’s say there is a qualified Buyer in this situation and the Buyer found a house on the Internet, they call their agent, and after further investigation, the agent informs the buyer the home they want to live in is still available but is listed as a “short sale.” What can a Buyer do to further their chances of the lender accepting their offer?


First off, if the Buyer decides to use the same lender the Seller is in default with as the lender for the pre approval of their loan, this would be favorable to the Lender. The agent representing the Seller must be communicating to the bank that there is a solid buyer for the property. This is extremely important. So, in addition, if the buyer submits copies of bank statements with the offer proving there is enough money to close the sale, this will avoid delays and look favorable in the eyes of the lender. Finally, submitting a certified copy of the signed buyer and seller’s escrow instructions, plus an estimated closing cost statement by an escrow office, and copy of the preliminary title report along with the offer, will complete the buyers supporting documents.

 If you find a house that is listing in the MLS as a short sale and it is pending the lenders approval, make sure you work with a Realtor who understands what a short sale is and what is involved. If you both understand your roll in the transaction, you will increase your chances of having a positive experience and getting the keys to your new home.

Published Tuesday, May 1, 2007 7:48 AM by Elisa Uribe

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