Orlando Mortgage Blog


December 2nd, 2008 3:48 PM by BILL WILBANKS


Don't set your hopes too high; at least don't expect a fast answer. That's my best recommendation to anyone considering making an offer on a short sale transaction today. I'll explain in a moment, but first what is a short sale? It's making an offer on a house that is lower than the debt currently owed on it prior to a lis pendens action (foreclosure) and asking the lender(s) to accept less than what they have due.

The lender can generally be expected to take up to 120 days to make a decision on your offer. In the mean time anyone can make an offer on the property of course. All sellers/mortgage holders will want a prequalification or preapproval letter on you to be submitted with your written offer. It's been my experience this last year in working these transactions that about one out of three or four get accepted and many go the full four months or so only to be outbid at the last moment leaving someone disappointed. Some lenders require an earnest money deposit to guarantee a "decision by a certain date" on your offer that is refundable if it's not accepted and applied against the purchase price if it is.

It has seemed in a lot of these cases that investors seem to win many of the offer wars late in the bidding game when strengths and qualification weaknesses such as downpayment ability may have surfaced to parties involved, but that may just be part of the give and take in a bidding war. I can't say their potential to buy multiple properties influenced it in any way, but as always make your best offer and be prepared to provide whatever is needed to get approved. I can tell you that Realtors® and loan officers work very hard and out of their own pocket to make these deals work for buyers with a relatively low closure rate overall. And they don't get paid if it doesn't close.

So if you are considering a short sale offer expect an extended wait on your offer response. Expect to be met with competitive offers almost for certain all the way to the end. And then if there are currently multiple mortgages on the house now (1st and 2nd let's say) both mortgage holders will have to agree to accept the short sale offer. Many times the first mortgage holder will accept an offer, but not the second mortgage holder and the deal falls apart or a better offer must be made.

If you are trying to speed the process and improve your success rate you might want to ask your RealtorĀ® to show you traditional listings or bank owned properties where a decision and closing can be made much faster. If the bank owns it now, they in turn want to get it off their Real Estate Owned (REO) list as soon as they can. The faster you can get a fully accepted contract, the faster you can lock your interest rate and move on and in.


Bill Wilbanks

Orlando Mortgage Masters

Posted in:General
Posted by BILL WILBANKS on December 2nd, 2008 3:48 PM


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