Myths, Real Estate Denver, Investment Property Short Sale

It’s important to note that whenever you have decided to make that short sale process, you have to be educated first and be informed and not just be discouraged right away by all of those misconceptions surrounding the short sale process. Yes, it’s not easy but it’s also not impossible. Sometimes short sales get a bad reputation from agents and likewise, sellers and buyers due to different horror stories repeatedly told all over again. Like how a bank short sale negotiator can be a monster to deal with. The following are the top five misconceptions about a short sale. First is Short Sale takes 12 to 18 months long to close. The truth is may just take within 28 days. The time frame for an average short sale by a cooperative bank and is not a former countrywide loan is usually it takes just seven to 10 days for the lender to acknowledge receipt of the complete short sale package which consist of personal seller documents and related real estate items including the buyer’s short sale offer. A negotiator would be assigned then an additional 30 to 45 days for a BPO or appraisal. Additional two to three weeks for management or investor review and short sale approval.

Another of these so-called myths is short sale buyers tend to pay too much. The real story is some listing agents in some metropolitan areas may deliberately price short sales below market value to attract multiple offers. This listed price is fabricated because, in reality, you won’t know how much a bank will accept until the offer is submitted. Although many of these banks will most likely consider a price at a minimum of 90% of market value. But some backs reject short sales from an unreasonable offer. Short sale banks won’t accept a severely discounted payoff. False. Banks understand the declining markets too. Some sellers may be even more astonished to discover that a home might be worth 50% or less it’s the original value when the seller bought it in a market where prices have fallen over a 5-year-period. Banks conduct their own research and will most likely do the same thing. The value of a home is based on a recent comparable sale and not based on the amount of the mortgage.

It’s not true when they say that short sale sellers must be in default before the bank will approve them, although, they are more likely to get the immediate attention than a seller who pays his mortgage on time. To qualify for a short sale the banks base it on the hardship of the seller and the value of the home. Although it would be an added benefit to the seller who pays on time with his mortgage is to qualify under the Fannie Mae guidelines so he can immediately buy another home.
It’s also not true that agents get paid a lower commission. That was long ago during the years 2005 to 2008 where banks are treating short sales dreadfully. They use to commission agents to peanuts. However, ever since the policy established by Fannie Mae in the year of 2009, where banks are made to pay the amount of commission not exceeding 6% agreed to between the seller and the agent, banks started paying a traditional or near-traditional commission to agents.

Reference: http://homebuying.about.com/od/shortsale/qt/070309-Short-Sale-Myths.htm