The deals on properties are out there, and now that short sales are becoming a consistent part of the Long Beach real estate market, we thought it would be helpful to provide some insight on what to expect when purchasing a short sale or a quick sale*.
Purchasing a short sale or a quick sale can present some challenges. Since a short sale is not a foreclosure there can be some challenges that are a bit different than your traditional Long Beach home or condo purchase.
- Time Frame - Understand that even with the best Long Beach realtors invovled, completing a short sale will take substantially longer than a traditional escrow period. Time periods to complete a short sale can often take 90+ days.
- Understanding Bank Approval - The bank that holds the first and second trust deeds on the property (and they can be different banks) must "approve" of the sale. They must take into consideration the purchase price and terms and the penalties (amounts owed by seller) and determine if accepting the offer on hand is better than going to foreclosure. This period can take 3 or more weeks.
- Repairs and Credits - Many banks are allowing very few (if any) credits for buyers to purchase properties. This is the case with short sales, but not the case in foreclosures at this time. Be aware that if you are purchasing a short sale you may get a break on the price, but may have to pay most (or all) of your own closing costs. Also remember that most of the time these are "as-is" sales meaning the seller will not make any repairs to the property.
- Escrow Updates - Your Long Beach realtor may often not have any information to update you on the status of your offer. Some banks allow the listing agent to check-in regarding the status of the approval, while others do not. It has been our experience, that GMAC, does not let realtors call for updates, while loss mitigation departments at WAMU do allow more frequent checking of the status.
If you want to purchase a short sale it can certainly be an opportunity to pick up a great property at a great price. Realize that you may need to submit a few offers out there on different properties so you can obtain one and just be prepared to pay some closing costs.
*Quick Sale is a term being used by Countrywide that means the same as a short sale
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When going to buy or sell a home, your first step should be finding a honest and hard-working realtor.
When going to buy or sell a home, your first step should be finding an honest and hard-working realtor. You can find a real estate agent by keeping an eye out for advertisements, calling your local real estate broker, or through the internet.
The role of a real estate agent is to represent your best interests in a real estate transaction. They work off of a commission, normally 6% of the sales price of the home. In most cases, that commission is split equally between the realtor representing the buyer and the realtor representing the seller. For a person buying a home, the service of the real estate agent is free, because commission is paid by the seller. The buyer, however, is responsible for most of the closing costs. The closing costs will be explained to you by your realtor and will be on the documents you sign when you go to the title company. Closing costs can also be negotiated on during the contract process.
The real estate agent, through their broker, has access to all of the MLS (Multiple Listing Service) listed homes in your area of interest. If you are a home buyer, the realtor can provide you with information about homes for sale that meet your criteria. They will then bring you to these homes and let you inside to see them. If you are selling a home, the realtor will list your home in the MLS, post a "For Sale" sign in your yard, and hold open houses to attract buyers. Be wary of discount realtors that offer to list your home for a lower commission. Studies show that, in most cases, your home will stay on the market longer and you end up selling it for a lower price than what you intended.
A real estate transaction is a complicated process that involves many steps and is best done with the help of a trained, licensed professional. A realtor can save you the headache of dealing with the other party in the sale, getting together the contract, and submitting all the documents to the title company. So when you are ready to buy or sell a house, contact the local real estate agent.
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