Why It Is Not As Hard As You Think To Sell Your Home During The Holidays

 

In all my years in real estate one of the most common things I hear from potential clients starting around mid November is "I want to wait until after the holidays to put the house up for sale". Granted, it is easy to assume that it would be better to do it that way- but here are the reasons why that assumption can be wrong.

 

1. Buyers are more serious

Most importantly, the most motivated buyers will continue to look over the holiday season. People who really need to or want to buy will continue to look regardless of what parties they are invited to and how much shopping they have left to do.

 

2. Less inventory available for the serious buyers to look at

Many people will take their home off the market and/or wait until January to list. In a market such as in the Modesto area where there is already a shortage of homes for buyers to look at this can pay off for those who decide to list. Less homes for buyers to look at means more buyers looking at your home, more offers and potentially more money in your pocket.

 

3. Homes are more appealing when decorated for the holidays

When your home is warm and cozy with a fire lit, cookies baking, and twinkling lights it will, by default, create a more emotional  and warm environment for potential buyers. Making them feel at home and nostalgic in your home will definitely result in offers.

 

4. Buyers have more time to look during the holidays

Most everything else slows down during the holidays- kids sports activities slow down, kids are on vacation from school, buyers may take time off work to spend time with family. During this down time the motivated buyers will definitely have more time to come see your home and can also be more accommodating to your schedule too.

 

5. Sell now, close later

Once you accept an offer on your home the most arduous part of the process for you is likely over. After the buyer is in contract you no longer have to worry about taking the dog for a walk so an agent can bring clients by, or that someone might show up while you're trying to make dinner. Once the offer is accepted all of the inspections will be scheduled in advance and with your Realtor's help you may not even need to be there! So if you list in early to mid December, accept an offer within a week, you can cruise through the 'holiday weeks' knowing that you have until mid-January (or later) to move out. The time periods are negotiable, so don't be afraid to use that to your advantage.

 

6. Tax implications

If you are doing a short sale or selling an investment property, there may be tax benefits to closing escrow during the calendar year. For specifics be sure to consult a qualified tax professional or an attorney.

 

If you are thinking about listing your home now or in the future, be sure to give us a call TODAY! Let us help you get a jump on your competition and put our knowledge and hard work to work for you.

Change Is In The Air!! Exciting New Announcement!

 

 

 

Hello Friends!

 

As 2012 comes to a close- I have some very exciting news! Effective today December 5 I am officially an agent with Re/Max Executive in Modesto! For those of you who have known me for a while you already know that I previously worked at Re/Max in 2005 and 2006 before moving to PMZ.

 

Why the move back, you ask? Well it is pretty simple- my longtime friend and associate Margeley Bernal and I have teamed up to form a powerful, experienced duo to maximize service and dedication to our respective client bases. Margeley and I bring a combined 15 years of experience to the table, offering you the best we both have to offer. Both of us are well versed in all aspects of residential real estate- from first time homebuyers to investors to the difficulty of short sales so you can be assured that your priorities are our priorities and you will get the best service possible.

 

Margeley and I will continue to cover all areas of Stanislaus County including Modesto, Ceres, Turlock, Riverbank, Oakdale, Salida, Waterford and Empire. Our coverage also reaches parts of San Joaquin County including Ripon, Manteca and Tracy.

Over the next several weeks we will be rolling out our brand new website and sending out some more notifications about the details of our partnership. We are both super excited to be working together and cannot wait to get started working for you!

My updated contact info:

Re/Max Executive

3425 Coffee Road

Modesto, CA 95355

phone (still the same) 209-614-3303

email (NEW!!) laceylfisher@gmail.com

 

Giving Thanks

Real estate can be an extremely tough business. I don't mean long hours hard work tough (but it is that too) for this example I mean mentally and emotionally tough. We are essentially providing a service, and there are 1000 other agents in line behind us that can provide the same service. Knowing this we often bend over backwards to please our clients- not only because of dedication to them and our profession but to keep them as clients. Sadly, no matter the amount or frequency of back-bending we do, we sometimes lose a client to another agent.

 

This is where the emotionally draining aspect of this business comes into play. It always hurts to lose a client. Always. It is an ego blow, a disappointment, a letdown, and sometimes a financial setback. Let's be real- selling real estate isn't for charity we actually do this to make a living.

 

I have had a pretty good track record over the years in retaining clients, but I lost one recently. A big one. An important one. A friend. I still am not sure why- and for the purposes of this post it isn't important. But what IS important, is that I realized today while washing dishes in my kitchen that relative to everything else that has happened this year it doesn't matter. Tomorrow is Thanksgiving, a day for reckognizing what we have, how far we have come and for those that enrich our lives. I have an amazing, healthy family. I have a warm, comfortable home to live in. I have plenty of food to eat. I am an American and I get to enjoy all of the rights and privileges that affords me. And- on top of all that- I get to help people at very important times in their life. Throughout this year and the past 8 years I have met and helped so many people either find their first family home, purchase their first investment property or helped them out of a crushing financial burden. Many of these people have become friends, but they have ALL enriched my life. I would not be where I am today without them, and for that I am truly grateful.

 

No- I am not going to let this ONE thing get me down. I have way too much to be thankful for.

 

Happy Thanksgiving everyone! 

Choosing the Right Lender- It is About More Than Just "Numbers"

I am a creature of habit. I HATE change. I have neither the time nor the patience for it. So, when my favorite lender, whom I adore both personally and professionally, broke the news to me that she was retiring I was flooded with a mix of shock, sadness, and then sheer panic.

“What about ME? What about my clients?!” I blurted out before I had time to think about what I was saying. Tears almost came out of my eyes. After several minutes of reassurance from her- my selfishness subsided and I was able to be happy for her- after all, she deserves it after decades of being the hardest working woman in real estate (I know that sounds like hyperbole, but if you know her like I do you know it’s true).

So here I am- being the opposite of a “change agent” left wondering what I am going to do the next time I need to refer someone to a lender. I have never really been one to “share the love” when it comes to referrals- like I said- I hate change, so when I found someone that worked the way I did I stuck with her exclusively. For YEARS. Granted, I am exposed to other lenders when I am the listing agent and represent the seller but most of those experiences left me being smugly satisfied I had her in my corner as opposed to being impressed by the buyers lender. 

All this turmoil has forced me to evaluate how I would pick a good lender- so I guess I need to take my own advice. I figured this would be a good opportunity to pass along to you what is important to me in a good lender. Keep in mind these points go beyond choosing a lender based rates and fees- those are easy to evaluate. There are many more intangibles that can make a lender good or bad.

1.       Is lending their full time job? If not- run. They shouldn’t also sell real estate or do property management or work at some other full time job. You need someone to be dedicated to the job you’re hiring them for so you get the highest level of knowledge and service possible.

2.       Are they local? If not- find someone local. Yes, we live in a digital age and most everything can be done electronically, but frankly out of area lenders rarely do a good job. Not only do they not have any interest in impressing the agents (because there is no chance of repeat/referral business) they do not have their finger on the pulse of the local market and coinciding potential appraisal pitfalls.

3.       Are they too busy to talk to you? If the first several times you deal with them they are not readily available, or they do not return phone calls or emails and you constantly have to chase them down take that as a sign and RUN in the opposite direction. It will not get any better.

4.       Does your real estate agent recommend them? If you are working with an agent that has been around for a while there is a good possibility that they may know or know of your lender. An honest agent will tell you if your lender’s reputation precedes them (either positively or negatively).

5.       Do they understand your situation? If they “preapprove” you over the phone without seeing your credit, income or asset documentation you should be worried. Underwriting guidelines change almost daily these days- so if you have even a slightly unique financial situation it is IMPERATIVE that they take the time BEFORE you are in escrow to fully evaluate your situation so you know if your loan will make it through underwriting. After you have put down a deposit, paid for the appraisal and inspections is not the time to find out your lender overlooked the fact that a past credit blemish or odd source of income will kill your deal.

6.       Do you feel comfortable with them? If you don’t, you should listen to your gut. Getting a mortgage is not like buying a car so you should not assume that it is normal for your lender to be unprofessional, dishonest, fast-talking or swarthy. They should be up-front with you about rates and fees. They should be able to quote you a rate after seeing your financials, at which time they should also quote you their fees. As a side note- a truth in lending statement is a better comparison tool than a good faith estimate, but we’ll save that for another blog post. If you feel instinctively that they are giving you bad advice- they probably are. Listen to yourself and get a second (qualified) opinion.

7.       Are they willing to answer the hard questions? A good lender will take the time to answer all of your questions- no matter the quantity or difficulty. They will also take the time to educate you on the entire process you are going through. Once thing I encounter a lot with buyers on my listings is they get frustrated with their lenders when they are left in the dark about what is happening with their loan and the lender won’t return their phone calls.

The bottom line is this: getting a loan for a home is a big deal. Do your homework, ask around (to people who know what they’re talking about) and make sure you FEEL COMFORTABLE with the person you choose to work with.

In the meantime I have found someone to step into the place of someone who I once felt was irreplaceable, so if you need a referral to a local lender- don’t hesitate to give me a call!

Control Freak? Buying or Selling a House? READ THIS!

When you are a control freak like me, real estate is a hard business. A real estate transaction, by nature, is a confluence of mutual interests. Sellers wants to sell, buyers want to buy, etc. Where it gets tricky is when there is disagreement between buyer and seller on the terms of the sale.  

This is where being a control freak becomes problematic. As the agent of either the buyer or seller I am not given the luxury of being able to participate in negotiations with the other side- let alone control the outcome of those negotiations to ensure the satisfaction of my client. In simpler terms- when I represent the buyer I cannot promise/guarantee/predict the seller’s response to our offer, and vice versa (as much as I may want to for my client's benefit!). I am simply the messenger delivering the message from the opposing party. Because I am your agent, not your attorney, I act upon your instruction whether or not I agree with or condone your decision and no matter how sure I am of the potential ramifications of your decisions. I cannot nor will not make decisions on your behalf.  I essentially deliver your message after offering you my advice and/or opinion.

OK. Go back and read that last paragraph again. Let it sink in for a second- there will be a quiz later. I’ll wait right here.

Got it? Great.  Now here is your quiz:

Buyer Jones makes an offer on seller Smith’s home. Asking price is $200,000. Buyer Jones’ offer is $175,000. Buyer Jones informs their agent they will absolutely not pay a penny more. The Jones offer is presented by the seller’s agent to seller Smith. Seller Smith chooses to makes a counter offer of $185,000. Buyer Jones is presented seller Smith’s counter offer and is now angry at their own agent because they stated they would not pay more than $175,000. Buyer Jones does not buy the home, and subsequently fires their agent.

What is wrong with this picture? I’ll give you a moment to think about it.

Got it? Good. In case you didn’t- here is the short answer: It is not the fault of Buyer Jones’ agent that seller Smith responded to their offer unfavorably. It is not the job of either agent to decide or dictate the terms of any offer or counter offer. Regardless of what Buyer Jones stated up front of what they will or will not do, seller Smith is entitled to counter in any way they see fit- and the terms of that counter are NOT the decision of the Jones’ agent- or the Smith’s agent for that matter.

Conversely, seller Smith should not be angry at their agent for presenting them with an offer that is less than what they said was the least they'd take.

So, you are undoubtedly asking “what is the lesson here?” Well let me tell you- buying and selling a house is more than understanding the terms of the contract and what interest rate your lender is giving you. It is important that you understand the entire process, and the nature of the agency relationship between you as buyer or seller and your respective agent(s). We are obligated to deliver messages to our respective clients, regardless of knowing how favorably or unfavorably the message will be received. Not understanding this vital aspect to real estate transactions can lead to misplaced anger and frustration on all sides. The more you know the better prepared you can be.

If you are ready to make the leap into the real estate market- please call me for a free, confidential consultation!

What Being A "Good Client" Means and How it Helps Your Agent Get the Job Done (Part I)

At the very crux of it, a real estate transaction is a partnership. The buyer seller and their agents need to partner together for a common goal- to close the transaction. When you are a buyer or seller the partnership begins though the very first time you meet your agent.

The nature of the relationship between you and your agent is such that your agent works with you to help you make decisions and they act based on your instruction. This is the case whether you are the buyer or the seller. Because of the nature of this relationship we NEED you to be an active participant in the process since we cannot act on your behalf much like an attorney would for a client.

In the first of this two part series I will address the buying side of the transaction. Part two will cover the seller's side.

So, what does it mean to be a "good client"?

BUYERS

1. BE SPECIFIC about what type of home you want and how much you want to spend. If your agent shows you a home you don't like tell them why. The more information your agent has the better they can help you find what you do want.
2. BE PATIENT when what you want does not appear immediately. Currently in Stanislaus County there is a serious shortage of inventory so almost every buyer is in the same position as you. Ask your agent to set you up with a client portal on Metrolist so you receive an email any time a home comes on the market that meets your criteria. This way you won't miss anything. Secondly, do not get discouraged when a home sells the same time it hits the MLS. With our inventory woes, many agents have homes sold before they even put them on the MLS.
3. BE AVAILABLE when needed. If you indicate to your agent you are absolutely desperate to buy ASAP they are going to accommodate that for you. So if you are truly in a huge hurry, and your agent calls you to show you what they believe to be your dream home- make it a priority. With our inventory the way it is you need to see the home as soon as you can, so telling your agent that you are too tired or you don't want to miss your favorite TV show indicates that you may not be as motivated as you think. If your agent needs signatures on an addendum or counter offer by a certain time- make it a priority. Returning phone calls, texts and emails helps too. All too often people lose out on homes because they cannot or will not make the time to do what is needed of them. There is only so much your agent can do without your participation. There are deadlines to be met and without your participation your agent cannot do their job of getting you the home you want.
4. BE TOGETHER when you see a home for the first time. Unless there are extenuating circumstances I adamantly recommend both decision makers see homes together.  In many instances there will be a deadline for offer submission so if one half of the decision making pair are not available it could cause you to miss out. And, when your spouse/partner tells you to pick out what you want and they will just 'go along with it', it NEVER works. Trust me. 
5. BE RESPECTFUL of your agent's time. Real estate is an appointment driven business. Most agents work with more than one client at a time, so calling your agent and wanting to see a house in the next 10 minutes may not be possible. While we try to accommodate your schedule as best we can the more notice you give us the better. If you give your agent 10 minutes notice and they cannot accommodate you- don't get mad at them and assume they don't have time for you! Your agent likely has other clients who require attention, not to mention a family they may want to see once in a while. There are many concessions agents make to accommodate your schedule that you do not ever see (missing dinner with family, missing kids baseball games, having to prioritize other client's needs, etc) so please do not hold it against us if occasionally we tell you "no".

If you are currently looking for a home or are thinking about jumping into the market, please take these points into consideration. Your agent will thank you!

RED FLAGS to Look For When Hiring a Listing Agent

Choosing the right agent to sell your home sounds easy, but there are a lot of "red flags" to look out for when hiring the right listing agent for you. Here are some things to keep in mind:

Are they easily accessible?
I don't mean do they answer their phone at 10pm when you call, but do they regularly and consistently answer their phone during normal business hours? Do they make themselves available to you?
RED FLAG: Their voice mail is consistently full so you cannot leave them a message. This is a HUGE pet peeve of mine. This indicates that your potential agent is sooooo busy and or careless they cannot clean up their inbox enough to make space for you to leave a message for them. What happens when potential buyers are calling them about your house? The calls go missed and you miss out!

Are they patient with your questions and concerns?
You will undoubtedly have questions and concerns about listing your house for sale, especially if you have never done it before.
RED FLAG: If they are rushing you into signing and telling you "not to worry" about your concerns they will likely also rush you into accepting offers and not be very patient in addressing your future concerns while you are in escrow.

Are they sensitive to your situation?
Many sellers in our current economic climate are not selling for financial gain, but for financial salvation. If this is you, you are likely a little embarrassed and self-conscious about your situation.
RED FLAG: If they make light of your financial situation and want to use it as a marketing ploy with phrases like "sellers loss is your gain" (another pet peeve of mine) it is not indicative of a person who is terribly empathetic with your given situation. They should care about your pride and not exploit your hardship to sell your home quicker.

Are they dedicated to selling your home?
Even though agents work with more than one buyer and seller at a time, experienced agents are very good multi-taskers and can effectively service all of their clients seamlessly.
RED FLAG: If they have another job!! Being a full time Realtor is a full time job. If you are trusting someone to sell your home it is more involved than signing a piece of paper and putting a sign in the ground. You need someone who is available to you, potential buyers and buyers agents without other commitments that will always have a higher priority than selling your home.

Are you hiring them or their name?
Many successful agents eventually create a "team" that works for them. There is usually an escrow assistant and maybe a buyer's agent or two. The team dynamic can be very effective and successful for many agents and their clients.
RED FLAG: You contact the agent to list your home based on your familiarity with their name around town, but soon discover that you are handed off to a "team member" and work only with them. While I am sure most agents who hire team members only hire competent able-bodied people, what is the point of hiring the high-powered big name agent if they are not going to be involved in your transaction at all? Sure, their name is on the sign, but are you really getting the benefit of their knowledge and experience if they are not the one actually working for you?

I know I have said it once- but I will say it again- selling your home is more than putting a sign in the ground and uploading some photos to the MLS. Interview more than one person for the job of selling your home, and be weary of potential red flags. Your wallet and your sanity will thank you later.

Don't Get Flipping Screwed: 5 Things to Know BEFORE You Buy a Flipped House

Flipped houses are everywhere right now. Investors are pulling their money out of other investments, hiring a crew of workers and rehabbing homes and selling them for a profit. There is absolutely nothing wrong with this business model, but there are some things buyers need to be made aware of.
Many habitual flippers have a standard addendum they require buyers to sign with various terms and clauses. On the surface they seem benign but are definitely written to benefit the seller so before you sign on the bottom line, ask yourself WHY they are asking you to agree to these terms.

Here are some examples:

1. Seller will pay buyer's closing costs only if buyer agrees to use one the seller's preferred lenders.

High volume flippers almost always have this requirement. Since most buyers ask for closing costs it is the sellers way of ensuring the buyer will use a lender they are familiar with since they are not allowed to outright dictate who you use for your lender. The problem here is this- the lender is likely getting a steady stream of business from this seller using this tactic so they may not have your best interests at heart but instead those of the seller. In a typical sales transaction this is not the case as the seller and your lender have no relationship to each other. Here are a couple examples of how the seller and the lender having a preexisting relationship can hurt you:

• If there are conditional issues on the property that become lender required repairs the lender may try to get the underwriter to dismiss the repairs to make the transaction easier for the seller. What happens instead is the buyer does not get necessary repairs performed by the seller because the underwriter was convinced to waive the repairs. In this instance whose interests do you think the lender is serving?
• Since the lender is familiar with the listing agent and the seller, he may presume certain things will take place within the transaction and make promises to that effect and in essence, speak out of turn. Nothing in a real estate transaction is final until it is agreed upon in writing between buyer and seller, so a lender making promises on behalf of the seller does not bode well for the buyer.

2. If the lender requires a second appraisal it is to be done at the buyer's expense

On many flipped properties, FHA requires a second appraisal if the house is being resold within three months of the last time it was sold. An FHA appraisal is between $450-$550, so paying for that twice is a pretty big expense.

• FHA guidelines dictate that the buyer is not allowed to pay for the second appraisal. How many sellers get around this issue is by saying that their credit for closing costs cover the second appraisal fee and will not pay for it outside of the predetermined credit. Depending on the lender you may have enough to cover the entire expense, but if you don't you will have to bring extra money to the close of escrow.

3. Property to be sold as-is. Seller will not perform any repairs.

The business model of all flippers is to minimize expenses and maximize profits. Once they have finished the remodel they are generally not interested in spending any more money on the property.

• If the seller is saying up front that they will not perform any repairs and the lender ends up requiring some you are going to be left high and dry. You will be required to bear the expense of the repairs on a house you do not even own yet. And- even the nicest houses have things the lender will want fixed so never assume nothing will need to be fixed.

4. The contract shall be considered cancelled and void if, at any time, the buyer and/or buyer's agent issues the seller a request to perform repairs or incur any additional costs.

What they are saying here is that if you so much as ask for a repair, credit or concession after the contract is accepted they reserve the right to immediately cancel escrow based simply on the request alone.

• This is simply ludicrous on two levels. First, no flipper is so talented as to have renovated a house to such perfection that an FHA appraiser will not find something that needs repair. Secondly, the contract that we use here in California has a provision built in that allows the buyer to inspect the property (that includes the appraisal) to find any defects, and then ask for repairs if they so desire. The seller in this instance is essentially crossing out that section of the contract and stripping the buyer of their rights to disprove of the condition of the property. That is NEVER a good thing.

5. On or before date "xx/xx/xx" buyer shall release all contingencies in writing. Failure to do so will indicate to seller ALL buyer's contingencies are waived. Furthermore, on date "xx/xx/xx" escrow company shall release buyer's deposit to seller.

This one is a double-whammy. What they are saying is that you need to release your contingencies on your own. They will not serve you with a notice to do so. If you do not, they will consider them ALL automatically released (often referred to as active vs. passive removal). Furthermore, upon release of the contingencies they are instructing the title company to release your deposit to them before escrow closes just in case you do default, they already have your money.

• Counter offers and addendums that make your contingencies expire after a certain date without specifically being removed (passive removal) are not uncommon. If you are going to agree to something like this make sure you, your agent and your lender are VERY on top of your time frames.
• As for releasing the deposit to the seller immediately upon contingencies being released is, in my opinion, ridiculous and should not be done. This clause is clearly designed to the seller's benefit ONLY and is a huge risk to you, the buyer. 

A sales transaction of any kind is a convergence of mutual interests. Despite what people believe, there cannot be one party in the transaction that has all the "power". Each party must benefit somehow, and each party must bear a certain amount of risk. For one party to ask the other party to bear all of the risk is (in my opinion) irresponsible and makes for bad business. Telling the buyer through your negotiations essentially "take this house on my terms or buy something else" is both arrogant and suspect. It fully makes me question the integrity of the seller but mostly the quality of the rehab done on the home.

If you are a buyer and you get a counter offer/addendum from a flipper, make sure you read it CAREFULLY and are very comfortable agreeing to their terms. Everyone starts a transaction thinking it is going to be roses and sunshine, but anything can happen, so PROTECT YOUR INTERESTS!

Understanding Real Estate Commissions- The Long and the Short of it

I get asked this a lot- "who pays your commission?"

The short answer:  The seller.

The long answer? Keep reading...

Most transactions in our market are either short sales (where the lender eats the commission) or REOs (where the bank pays the commission). BUT if you are in the unique position to be selling a home that has some equity YOU are the one who will be paying the commission to both the listing and selling agents.

Here are some common concerns when it comes to commission:

How is commission determined?

The commission is agreed upon when you (the seller) and your listing agent sign a listing agreement prior to the property going on the market. Also in the listing agreement is your authorization for the listing agent to advertise what the buyers agents commission will be.

If I am unhappy with the offer I received on my home can I renegotiate your commission?

Well.... yes and no. What is published in MLS as the "cooperating broker compensation" (technical term for what the buyer's agent gets) is binding even if it is an error- UNLESS you have a very understanding and cooperative buyer's agent on the other side of the deal who is willing to take something other than what is advertised.

What you have already agreed to pay your listing agent can be renegotiated after you receive offers on the property, but honestly it is really bad form. It is the same as agreeing to pay your mechanic for fixing your car then when you pick it up after he does the work you try to get him to cut you a deal. If your home is on the market a while and you are concerned about selling it for much less than what you had planned, the time to approach your agent with your concerns is before they bring you offers. Since commission is agreed upon between the listing firm and the seller, the buyer and their offer are not a party to it so the two should be treated separately. A good time to bring up a commission reduction may be when you discuss a price reduction, and the terms can be changed in a Modification of Terms Agreement. Most of us agents are very sensitive to your concerns and very cooperative and will work with you the best we can within the guidelines set forth for us by our broker, but with that said we do have to make a living.

Can I offer the buyer's agent an increased commission to entice showings?

Yes!! The typical commission split is 50/50, meaning 3% to each agent. That is not set in stone though, so if you want to be more competitive you can offer a 4/3 split or a 3/2.5 split- it is completely up to you and your agent and can be laid out in your listing agreement.

I still don't understand! What am I paying for? How much is it again?

You should never be afraid to ask questions- ESPECIALLY when you are about to sign on the dotted line! As a general rule I go over the listing agreement with my sellers in grave detail so I know I did my best in helping them understand. If your agent does not do this, please ask questions before you sign. A good agent will not have a problem with this and will answer your questions until you are fully satisfied. In addition, when you invite an agent over to your house to discuss listing it for sale, they should bring with them an estimated closing statement that will have real dollar amounts on it estimating your costs in selling your home. This will change as offers come in and taxes and interest are prorated, etc, but for every price reduction and every offer received your agent should be giving you one of these. This document WILL have the commission clearly itemized on it. Please look at it so you are not surprised at closing time!

For more information on this or any other commission/real estate related topics, please do not hesitate to contact me.

There Are NO Guarantees When You Buy A Short Sale!

The learning curve is getting pretty steep when it comes to short sales lately. There are still surprises cropping up that are teaching us all a valuable lesson- there are no guarantees when you buy a short sale.

Recently some clients of mine who were buying as an investment received an accepted offer on a short sale. The home had two loans (first with Bank of America the second with Chase) but only the second was being paid off short. Our approval came relatively quickly, but once it came we were all shocked to find out that we only had 7 days to close escrow! Being a cash deal this is entirely possible but since it was right before Christmas it was going to be tight. Disclosures were signed and our home inspection was scheduled for day 3 of 7. Just before the home inspector was supposed to go out to the property the listing agent called and informed me the house had sold at the trustee sale that morning.

What does that mean?

It means my buyers don't get the house because someone else owns it now.

Bank of America, even though they had ASSURED all parties involved there was no sale date set, and had fully cooperated with the short sale proceeded with foreclosure just two days prior to the new buyers taking possession of the property. All of us were in complete shock. Not only did we not see it coming, but Bank of America was being completely paid off in the sale transaction and would be made whole through the sale. They undoubtedly lost tens of thousands of dollars in foreclosing instead.

So what is the lesson here?

In this scenario based on the information available none of the parties involved could have known the house was going to trustee sale. There was nothing noted on the tax records or on Foreclosure Radar and the listing agent was given false information. However- that is not always the case. When you are buying a short sale it is vital that your agent and the listing agent and the owner of the property are diligent in working with the bank and staying abreast of the public records to be sure the information being conveyed by the bank is in fact accurate.

The secondary lesson to this is essentially to not get your hopes up. There are a couple disclosures you sign as a buyer that let you know that there are no guarantees when buying a short sale, and situations such as this are the exact reason why you sign such disclosures. Don't get me wrong, it certainly does not make it any easier, but if you know and understand from the very beginning that this outcome is a possibility it makes it a much easier pill to swallow.