A Buyers Guide To the Short Sale Process
With Las Vegas Home prices and interest rates at an all time low, it is a great time for buyers to start shopping around. However, it is a different market than it was five years ago and terms like “foreclosure” and “short sales” are on the tip of every real estate agent’s tongue. Short sales can be a great way to save money on a property in Las Vegas, but it could come with some bumps in the road. As a buyer it is important to know what you are getting yourself into.
A short sale is a negotiated settlement in which a lender agrees to accept less than the amount owed to payoff a home loan as an alternative to foreclosure. The result is that the bank and the seller don’t have to go through the foreclosure process and the buyer gets the property at a discount.
Sounds simple enough, right? Well, unfortunately for the buyer, the short sale process does not mean what its name implies. It is usally not a short process. Once an offer is submitted it can take anywhere from 30 days to six months to get an acceptance from the bank to do the short sale. Some banks, like Bank of America, have historically been a very difficult instution in appoving short sales. Some of our team’s agents however, have reported Bank of America speeding up their approvals with the implementation of their Equator system. Equator is an online portal agents and the bank use to upload and process short sale documents. This is where having the right agent is critical. Their experience can go a long way in helping a buyer analyze which short sales may have a better chance of closing in a more reasonable time frame and which ones a buyer may want to avoid.
Now that you are aware that you may be in for a long haul, here are a few things to expect when going through the process. First, your offer will be submitted to the bank, while financial statements will be sent to the bank on the seller’s behalf to establish the need for the seller to do a short sale. Second, the bank will do an appraisal on the property. Third, a negotiator will be assigned when all paper work on the seller and buyer’s side has been submitted. The negotiator will go through all the paper work and make sure everything works out. At this point the bank should have an idea of what they expect to get from the property. They can either accept the offer, counter the offer or reject it. If approved, the bank will issue letter which allows the property to be transferred. At this point the escrow can continue in earnest.
Each bank may have a slightly different way of doing things. As well, each bank may work on different time tables. Some work more swiftly than others, while some take their time. What is important is knowing that it is often not a quick process, but if you are willing to wait, you could pick up a gem. A buyer will also have the benefit of locking up a transaction rather than being forced to continually look to foreclosures, many of which are now multiple offers due to the lower foreclosure inventory currently available.