Short Sales and Foreclosures Part 2

CAN I GET THE SELLER TO MAKE REPAIRS, PRIOR TO CLOSING, IF I PURCHASE A SHORT SALE OR FORECLOSURE?

In a short sale, the answer depends on whether the seller has any money to do the repairs. Usually, sellers are already financially distressed and do not have the funds to do any additional work. Most foreclosed properties are sold “as is.” As part of the sale, you may be requested to sign an “As Is Addendum.” This means you will take the house “as is” and you may not request any repairs. However, you do not waive your right to an inspection. If the inspection shows severe problems with the home, pursuant to the contract, we will withdraw your offer. The standard contract states you have a 10 day inspection period
which begins to run from the day you enter into a fully executed contract with the seller/lender. All earnest money will be returned as long as you cancel the contract within that inspection period set forth in the contract.

CAN I GET MY CLOSING COSTS PAID BY THE SELLER ON A SHORT SALE OR
FORECLOSURE?

Sometimes, if you need closing costs, we can include that in the offer. Depending on the seller’s circumstances in a short sale and the arrangements they have made with the lender, there is a chance they may agree to the terms. It will also be based on what the offer price is and other terms. It never hurts to try, however a CLEAN offer is always the best way to go. I will explain this in more detail when we decide to write an offer.

WILL I GET EQUITY ON A SHORT SALE NO MATTER WHAT?

Not necessarily. The market is changing daily. The home may be perfect for you, and you may end up paying what is equal to current market pricing because it is exactly the home you desire. As your agent, I will counsel you on what the current market rate is for the home you choose. This will be determined on a case by case basis depending on the price, neighborhood and current market for that area.

WILL I HAVE TO PAY ANYTHING EXTRA TO PURCHASE A SHORT SALE OR
FORECLOSURE?

Other than your usual closing costs, loan fees, taxes and insurance… no other costs should be expected in the purchase. The only extra costs you have may not be monetary in value, but instead in the time it may take to get through the approval process and escrow if your offer is accepted.

IF I OFFER THE FULL LIST PRICE, WILL THE LENDER ACCEPT IT?

In a short sale…not necessarily. Unlike a Foreclosure, where the lender has dictated the list price, the list price on a short sale is determined by the seller’s agent and usually is not reviewed by the lender until at least one offer has been made on the property. On short sales, often the listing agents place a very low price on the home just to get an offer. There is no guarantee that an offer of full list price would be accepted by a lender. Again, it never hurts to try, but just be aware.

I hope this helps explain the differences between foreclosures and short sales. For the right person and the right home, these types of properties can become a great investment.