Are you uncomfortable looking at Bank Short Sale Listings. I would like to offer a few questions your Realtor should ask the Listing Agent before making an offer on a bank short sale listing.
(1) How far behind is the Seller on the mortgage payments? Most mortgage companies will not get serious about an offer unless the seller is atleast 4 months behind in the mortgage and the bank has already started the process for foreclosure proceedings.
(2) Has the Seller submited all the required documents to the Lender? The lender will not even give the Listing Agent a reply with out all the sellers required documents. Some banks want the seller required documents and your offer submitted or all at one time. Just knowing the listing agent has all the documents in their file ready will speed up the process.
(3) What kind of discussions have you had with the Lender ? You should be able to tell if the listing agent is in tune with the file and the bank. If the listing agent is without a direct line to the assigned Loss Mitigation Officer to the file would in most cases result in a longer then normal reply on your offer. This of course is never a good thing.
(4) Does the Seller have a First and a Second Mortgage ? Is the second it with the same Lender? It takes more time to close a bank short sale with two mortgages and is even more difficult.
(5) Does the Seller have PMI ( Private Mortgage Insurance ) on this property? Many times this comes out in the very end of settling the short sale , So ask it up front before making the offer. More often then not, the Investor that bought the insurance, will require a promissory note for the balance on his investment, before accepting to close the deal. Most of the time they will not remove their portion of the debt on the property, if the seller can not come to terms on a cash or a payment plan, the mortgage will not be able to be released from the mortgage regardless of the contract price.
There are some very good deals on homes that are listed as a bank short sales. They normally do not receive multi contract offers like bank owned property.
I suggest, don’t shy away from the bank short sales! Find a Realtor that has experience in purchasing and closing bank short sales. We just need to start these simple discussions with the listing agent. The answers will give a you a better understanding on the direction you should take as the home buyer. The best decisions are made when you have the best most accrete information.
Please feel free to contact me, I will guide you through your real estate experience with care and confidence you can count on.