Minihan Group - Atlanta Trusted Real Estate Advisors

How Are Short Sales Different? – Negotiating Repairs

admin — Sun, 20 May 2012 11:45:29 +0000

Similar to when purchasing a foreclosed property, the seller will likely not be in a position to pay for, or make repairs on, the property, as they are usually broke at this point. That doesn’t mean that you can’t try to negotiate repairs into the deal after your inspection, but you should be prepared for the seller to not be able to make any repairs to the house. As long as you know this going into the deal, your expectations will be appropriately set, and anything you and your agent can negotiate in will be a bonus.

How Are Short Sales Different? – Short Sale Contingency

admin — Sat, 19 May 2012 11:45:08 +0000

The short sale contingency is part of the contract that in essence states that the agreed upon contract is valid only if the seller’s lender(s) approve the short sale agreement necessary for the seller to perform on the contract. Often these contingencies will include some language that requires the bank to let the seller off the hook legally for some or all of the short fall that exists between what they seller owes the bank, and what the bank is getting as a result of this sale. It is important to understand what each contingency says and means as a buyer before entering in to the contract, and your agent will assist you with that when preparing your offer and negotiating the contract.

How Are Short Sales Different? – Binding Agreement

admin — Fri, 18 May 2012 11:45:27 +0000

In a “normal” transaction, the binding agreement date is the date that all timelines (financing/appraisal period, due diligence period) work off of. With a short sale, we enter into a binding agreement with the seller (not the bank), but the contract is contingent on the seller’s lender approving the short sale. Often there is confusion over whether we actually have a binding agreement before we have bank approval, but in fact we do, with the seller. The difference with a short sale contract in regard to the binding agreement date, as explained above, is that many of the timelines that normally start at the time of binding agreement are postponed until the time the buyer receives written short sale approval from the seller’s lender.

How Are Short Sales Different? – Due Diligence Period

admin — Thu, 17 May 2012 11:45:59 +0000

In a “normal” purchase, the due diligence period would start immediately upon buyer and seller reaching a binding agreement. With a short sale, this is not usually the case. From the buyer’s perspective, we don’t want our buyers to have to pay money out of pocket on inspections before we know if the bank is going to approve the sale or not, so generally speaking, we try to negotiate into the contract that the due diligence period will not start until we have written short sale approval from the seller’s lender(s). That being said, we have to be ready when that approval does come to get our inspections done quickly.

How Are Short Sales Different? – Financing & Appraisal Timeline

admin — Thu, 17 May 2012 11:45:26 +0000

As with the timeline of the due diligence period, we generally try to stipulate that the buyer’s financing and appraisal contingency timelines will start upon the receipt of written short sale approval from the seller’s lender. We do this because until we have approval from the lender, we are not certain when the closing date will be, which makes it difficult and sometimes costly to lock a rate with the buyer’s lender as rate locks expire after 30 days, 45 days or 60 days respectively. Until we know when the closing date will be, we can’t lock our rate. Likewise, we don’t want our buyer to have to pay an appraisal fee of several hundred dollars on a property until we know that the bank has approved the deal, so our appraisal contingency timeline does not start until we have the bank’s written approval either.

How are Short Sales Different? – The Process

admin — Wed, 16 May 2012 21:55:39 +0000

There are a number of differences in the purchase process, from a transaction stand point, when it comes to purchasing a short sale versus purchases a non-distressed property. Here is a list of the main process steps that differ from normal sales; these will be discussed in more detail in the proceeding parts of this guide and your agent can coach you along the way on some of the other ways these deals may vary from the tradition transaction.

Due Diligence Period
Financing & Appraisal Timeline
Binding Agreement
Short Sale Contingency
Negotiating Repairs
Closing Attorney Selection
Risks for the Buyer

Appealing Atlanta Property Taxes 2012

admin — Sun, 13 May 2012 19:27:31 +0000

Its that time of the year that property owners in Atlanta should be receiving their Annual Assessment notice telling them how much the Tax Assessor is Valuing their property, which means its time to appeal those property taxes again. This won’t make sense for everyone to do, but given the fact that property values have dropped dramatically in some neighborhoods of Atlanta, due to the number of short sales and foreclosures that our market has experienced over the last several years, the tax assessor may be valuing your property at amounts that are much higher than you could get if you put the house on the market. If you’re not able to get that kind of money on the open market, you shouldn’t be paying taxes on it.

In 2010, the Georgia Senate passed the Property Tax Assessment and Appeals Reform Bill (Senate Bill 346). This bill required each county to mail to each property owner, an Annual Notice of Assessment and the right to appeal. These Annual Notices of Assessment along with the Appeal Process are coming out the month in Metro Atlanta and homeowners have 45 days to appeal their tax bill for the year or else you have to wait until this comes around again next year. I know that Gwinnett and Cobb counties have already mailed their notices out and Fulton and Dekalb are probably in the mail or will be shortly. Keep an eye on your mail to see what your home is assessed at and if you think that assessment is unfair, read the literature on the process for appealing to find out how to appeal and when your appeal deadline is for 2012. Here are the links to some of the Atlanta Metro Counties websites with their Tax Appeal Protocols:

If your county is not on this list, or if you have any questions regarding Tax Appeals, contact us.

Time Frame of Short Sales

admin — Fri, 11 May 2012 11:45:51 +0000

That brings us to the time frame of short sales. Contrary to what their name suggests, short sales are usually anything but short! While the processes have become a bit more streamlined over the last few years, and with the pressure from Congress and the Administration to make this process easier, the fact of the matter remains that short sales take a while to get pushed through the bureaucracies of large banks. We won’t go into all the details of why this is in this guide because it is really not important. What is important is that your expectations are set appropriately going into the purchase of a short sale. Buyers with a need to buy and close on a home within 30-45 days should generally not pursue a short sale. While we have seen short sales completed in 30 days before, it is the exception to the rule. The buyer will have to be flexible with their time table, so if you are leasing and can go month-to-month for a while, that is advisable until we hear back from the bank that the contract has been approved and get a timeline for when the deal can close, from the bank.

As a rule of thumb, expect a short sale to take between 90 and 120 days unless it is truly lender approved. That being said, some banks move more quickly than others (and some more slowly) so you must be prepared to close sooner or later than that as well. This poses a challenge to the buyer as we have no way of telling really, how long it will take for the process to complete. This all depends on the seller’s lender, the seller’s level of cooperation with the process, and the skill level and experience of the seller’s agent when it comes to negotiating short sales. Your buyer’s agent can also help in coaching the seller’s agent on the process if they are more experienced.

We’ve had clients that have taken 6 months to close on short sales, and we’ve also seen clients wait 6 months and then have the short sale fall apart at the last minute because the seller would not agree to one of the bank’s terms in the end.

Bottom line, the deal needs to be worth it to you and you need to understand that there will be a lot of “hurry up and wait” involved with the process. If you can be patient, your reward will be a really good deal and hopefully some solid equity in the house. If that is not worth it to you, it’s better to concentrate on the listings for sale that are not short sales.

How Do Buyers Guard Against Short Sale Pricing Techniques?

admin — Thu, 10 May 2012 11:45:52 +0000

The best way to keep a seller’s agent from using a short sale pricing technique against you is to work with a buyer’s agent who has experience working with short sales and distressed properties. They can help you to determine up front if the seller is employing this technique by looking into what is owed on the property and what the market is paying for comparable houses to the one you are interested in. This way you will know the chances of the bank saying yes or no, and understand what a realistic purchase price for that property may be. Perhaps you decide that even though it looks like a long shot, to go ahead and make the offer, that’s fine, but at least you will know that the chances are slim and you can continue to look for other properties while that short sale is in process so that you don’t miss anything better.

Short Sale Pricing Techinques

admin — Wed, 09 May 2012 11:45:16 +0000

Now that you know what a short sale is, let’s discuss a common short sale pricing technique that you will see when you are viewing properties in the market. The main technique to be aware of is an unrealistically low list price. One nuance to the way banks process short sales is that they will not even begin negotiating with an owner until they have a binding contract from a real buyer in hand. This sounds a little silly but it is what it is. Therefore, the first step for a homeowner that is applying for a short sale is to put the home on the market and get an offer on it immediately. The way to get an offer on a property immediately in most real estate markets is to price the property extremely low. There are always people out there looking for a great deal, so by listing a property well below market value, you will certainly draw attention and most likely get an offer quickly. However, buyers must be aware that sometimes sellers and their agents will put the price so low compared to what the seller owes and what the market would realistically pay for the property, that there is no way the bank will approve the sale at the price or any price like it. The tactic is used by agents to get the bank to come back with a counteroffer to tell them what they would accept. This number may be way out of the current buyer’s price range so the deal falls apart for that buyer.

The reason agents use this tactic is so that they can get that number that the bank will accept and then advertise their listing at that price as a “Lender Approved Short Sale“. The savvy buyer will be more attracted to a lender approved short sale than one that is not lender approved because they can be sure that the process has already been started with the bank and a precedent has now been set with the bank on that property. The chances of getting the deal done at that price are much higher so the deal is much less risky for the buyer. The seller’s agent can simply take the new offer, at the price that the bank previously countered and say to the bank “Hey, you were willing to take this last month, will you take it now?” Usually they will.