THE ADAMS TEAM
Rothwell Gornt Companies
Las Vegas Real Estate Agent Robert Adams Las Vegas Real Estate Blog
Many people in the market today are first-time home buyers who would not have
been able to buy when home prices were higher. Enticed both by lower prices and
bank promotions, these eager hopefuls are have taken the signs of deals as the
best chance to make their first real estate move .
While all home
buyers need help with the short sale process, it’s especially challenging to
address the needs and concerns of a first-time home buyer who has decided a
short sale is the home for them. Here’s how to get answers to first-time home
buyers’ top three questions about short sales.
1. How long does it take
for a bank to approve a short sale?
This is the million-dollar question.
While it takes an average of three to six months, the timeline – and the
process – vary quite a bit from one bank to another.
approval timelines depend on the bank (some just take longer than others).
While each bank has different short sale guidelines, the short sale has to make
sense to the bank. The more sense the short sale offer makes to the bank, the
faster the approval process.
Here are some things that slow down the
process by several weeks or more – these usually involve more people or more
•Multiple liens on the property
•A third party negotiating the
short sale on behalf of a seller. Some states allow third parties to do this,
for a fee; some states, like Virginia, limit this to real estate licensees,
attorneys, and employees of attorneys.
•Private Mortgage Insurance (PMI)
on the property
Action: To make an accurate
prediction about the short sale timeline for a particular property, research
the bank’s general timelines, the property’s liens, and whether there is PMI
before writing the offer.
2. Will the bank make repairs to the property?
The short answer is, probably not.
does not have possession of the property and has no authority to make repairs on
behalf of the seller.
•Many short-sale sellers do not have the financial
means to make repairs.
•Many banks require the short sale to be sold
strictly “as-is” and do not allow the seller to pay for any repairs.
wouldn’t a bank allow the seller to make repairs? your buyer may ask. A short
sale is a sticky situation for a bank, and that the bank wants to avoid
potential liability. For example, if the bank allowed the seller to make
repairs and the repairs proved to be faulty, the buyer might potentially hold
the bank liable, since the seller doesn’t have money (which is how the
short-sale situation came about in the first place).
Action: Find out
how the bank and the seller feel about making possible repairs. A short-sale
buyer needs to understand that the home will most likely be sold strictly
“as-is” and all repairs will be at their expense.
3. How do other types
of debt affect the short sale outcome?
Many short-sale sellers are more
than just “house-poor.” Many have additional debts that place a cloud on title.
These include tax liens – income and property, medical liens, mechanic’s liens,
and child support judgments.
Depending on your state, some creditors
can try to collect debt by going to civil court and getting a judgment lien
placed on the property against the homeowner. These liens must be cleared
before the short sale transaction can be closed.
•Surprisingly, tax liens
are probably the easiest to clear off the title. The IRS has several avenues to
collect back taxes, and doesn’t want to become a real estate holding company.
Removing a tax lien can take up to 120 days, so it is imperative that this
process is started well in advance of the short sale.
•Medical liens can
usually be negotiated and a payment plan worked out. However, this is a
time-consuming process and needs to be started as soon as possible.
•Mechanic’s liens are a little harder to get removed. There is not much recourse
for tradespeople and bad debts.
•Child support judgments are also difficult
to remove because they usually involve government agencies.
additional debts can tie up the short sale process.
Action: Make sure to
ask the listing agent if a preliminary title search has been performed on the
property so you can advise your buyer about possible obstacles.
more information you can offer your first-time home buyer, the more confident
they can be about the transaction. The more confident they are about the
transaction, the more likely they will see the transaction through to the
You can read more about this article from Trulia here:
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