and Commercial Real Estate Sales
on the East Coast of Central Florida
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Short Sales / Pre-Foreclosures
A Buyer will pursue a Short Sale because they feel it is a good deal. However, before you proceed, there are a few things you should know before purchasing the home. The first step is to consult a Realtor. They will be able to research further into the home and let you know whether or not this is a Short Sale or Pre-foreclosure. Either way, it will not be as simple as you may think and rarely will you be able to close within 30 days or less.
What is a Short Sale?
A Short Sale is when a Homeowner/Seller's Lender is willing to accept a discounted payoff to release them of their existing mortgage. It is entirely up to the Lender whether or not an offer is accepted, even if the Homeowner/Seller accepts it. In addition to this, the Homeowner/Seller must be in default of their mortgage payments before the Lender will allow a Short Sale to occur.
Do Your Research
Prior to making an offer on a Short Sale, make sure you do your research. Utilize the services of your Realtor to assist you in your search. Your Realtor can tell you how much is owed to the Lender(s), whether a foreclosure has been filed on the property and the person on the title. If the Homeowner/Seller has acquired two loans, the Second Mortgage Lender will more than likely be the one you deal with. This is so the Second Lender will not be eliminated if the Buyer's offer only covers the first mortgage. For instance, if the Homeowner/Seller owes a total of $250,000 - $200,000 to the First Mortgage Lender and $50,000 to the Second Mortgage Lender, a Buyer cannot bring an offer of $200,000 because it will wipe out the Second Mortgage Lender.
Be Prepared
A Short Sale will not be approved by the Lender unless the Homeowner/Seller has provided them with a Hardship Letter, does not have equity and does not have the ability to repay the difference between the existing loans and sales price. Also keep in mind that the Homeowner/Seller should receive no money during the Short Sale process because their lenders are the one's losing money. Therefore, be wary of any Homeowner/Seller indicating you as the Buyer owe them money.
Remember, the Lender is the only one who has the ability to accept or deny your offer. Although the Seller may accept your offer, they must get a stamp of approval from the Lender. It is wise for you to send the Lender a copy of your earnest money deposit and you should not be surprised if the Lender asks you to increase your offer.
You will also need to provide the Lender information regarding your loan availability and preapproval status. You will want to send the Lender your preapproval letter from your Lender and a CMA (Comparative Market Analysis) from your Realtor to justify your offer.
Lastly, you will want to provide the Lender with a time frame. Let them know your offer is contingent upon acceptance and you are free to cancel the Short Sale process if no response/counteroffer is received within the time frame. Make sure you obtain the Lender's info prior to submitting any type of offer so you know the appropriate person direct your offer and questions to.
Out of Pocket Expenses
With Short Sales, the Lender will not generally pay for customary items a Seller would typically pay, therefore be expected to fund your own inspections. The Lender will expect the Buyer to purchase the property "AS IS" and will not pay for any repairs. Therefore, it is extremely important you obtain all home inspections, including termite/pest, roof, sewers/septics and fireplace (if applicable). Make sure your offer is contingent upon approval of these inspections.
Please Contact a Curri Properties Agent with Further Questions/Concerns on Purchasing a Short Sale - 321-259-1003 or 321-255-9555
By Elizabeth Weintraub
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2893 N. Harbor City Blvd.
Melbourne, FL 32935
With Offices in Vero Beach, Orlando, & Ormond Beach/Daytona Area