Monroe Washington has it’s share of short sales. Click here for all Monroe Short Sales. What IS a Short Sale ? A Short Sale is where the value of the home is less than the selling price plus closing costs. So, if the sales price of a home is $250,000 and the closing costs (title, escrow, excise taxes, sales commissions etc.) are $20,000, and the balance on your mortgage was $230,000 then you would break even. But, if the sales price was less than $250,000 and you did not have cash to make up the difference, the this is a short sale. A short sale in Monroe works like it would in Snohomish, or King county, or pretty much anywhere else in Washington. Keep in mid the following tips if you plan on making an offer on a short sale listing.
1. How many lien holders are there?
One lien holder is great because it simplifies the negotiation. 2 lien holders makes it twice as difficult. If bank #2 doesn’t like what bank #1 is offering to settle their balance, bank #2 will dig their heel in and can keep the short sale from going through. What’s crazy is this can lead to the foreclosure, in which case bank #2 gets nothing! For Monroe WA, the Snohomish County website is an excellent resource.
2. How long can you wait for approval of the sale?
Are you willing to wait 3-6 months for the offer approval and closing? If not, then you should not be looking to purchase a short sale. If you are, then great. There are some great deals on short sales.
You are at risk if values go down, but you may or may not benefit if prices go up.
Once you have a contract, its pretty difficult, if not impossible, to reduce the offer price. If prices are falling, over the course of 3-6 months during the approval period, you have overpaid for the property. On the other hand, if prices are increasing, the bank can very easily negotiate a higher price in order to approve the sale.
3. Is the listing agent a CDPE?
A CDPE (Certified Distressed Property Expert) has gone through extensive training and certification on all aspects of short sales. If you are going to make an offer on a short sale, find out if the listing agent is a CDPE. The listing agent can make or break the approval. Here is a great CDPE.
4. Is the seller asking YOU the buyer to pay a negotiation fee?
Some listing agents and/or sellers will hire a 3rd party negotiator and ask the BUYER to pay their fee.
5. Make sure that you are not contractually required to start your inspection until AFTER the offer is approved.
Why should you, the buyer, pay $500 to do an inspection, $400 for an appraisal, or any other expense, if the offer is not going to be approved? All buyer due diligence should not be required to begin until AFTER bank approval of the sale.
6. Has the seller received a notice of foreclosure?
The biggest mistake I see is that a seller waits too long before deciding to try to do the short sale. If the lien holder has started the foreclosure, the seller may only have 90-120 days total to complete the sale before the scheduled auction date. Sometimes they will postpone a foreclosure if they have a pending short sale. However the SHORT SALE department and the FORECLOSURE department are 2 entirely different groups, even if they are with the same company. Often the communication between these two departments is not good, or possible what seems to be not at all.
To begin your search for a short sale listing in Monroe WA, start with Bray Realty!