Archive for July, 2009

Orange County Short Sales – 4 things you MUST know

Posted on July 11, 2009. Filed under: First Time Buyer help, Orange County Real Estate |

There’s a ton of Orange County Short Sales out there, and we’re finding many of our buyers are still confused on what a short sale is, and how long it takes to close.  We wanted to give you the scoop on what to expect if you’re searching the Orange County short sale market.

First, what is a “short sale“?  In laymans terms, short sales are properties that have depreciated to the point where the amount mortgaged on the home is more than the home is currently worth.  Because the owner is forced by circumstances either financial or personal to move, they actually have to negotiate with the bank to take a lesser amount than is mortgaged on the property.

So, what does this have to do with you, the buyer?  A LOT.  Short sale rules are different, and we want you to know what to expect if you fall in love with a short sale property.  Here are a few “must know facts” when dealing with short sales.

1. The price you see on the MLS is not always APPROVED as the sales price. WH-WHAT?  Isn’t that like…false advertising???   Maybe, but that’s correct.  Many banks will not even consider taking a lesser amount than you owe for your home until you have an offer for your home on the table.   The short sale condo in Mission Viejo you like could literally be listed on the MLS for $299K, but once you submit your offer for $299K, the bank comes back and says “no go, we want $315K”.  As the buyer, you can choose to walk at that point, but you need to be aware this can and does happen regularly.
2. Short sales are anything but short. Remember, the bank has to “approve” the price of your offer, not just the current owner of the home.  Many times it takes weeks and even MONTHS for them to get back to you.  For this reason, if you need to be into your new home in 6 months or less, you may want to eliminate short sales from your property search.  Make sure you’re using a professional Realtor *like us* because we can help to sniff out how far along a short sale is.
3. You’re expected to play by the bank’s rules. Every bank is different.   After making you wait for months, many banks come back and expect you to close in a whirlwind of 3 weeks or less  (this is NOT a reasonable amount of time to get a loan anymore).  Also, the bank may want to re-write the CPA (California Purchase Agreement) and have you sign forms their lawyer has created for the transaction.  This makes many people uncomfortable, so be prepared!
4. After the bank accepts your offer, they still have the right to accept someone elses offer. SERIOUSLY?  Seriously.  Because the bank is put in the situation where they are taking less money than they are owed, it is their right to accept someone elses higher or stronger offer AFTER they accept yours.   You could literally have your bags packed and get this bad news, and as your Realtors we want you to know its a possiblilty.  This doesn’t happen that often, because the bank just wants to get the process done too, but it can happen.

Orange County short sales are a roller coaster to say the least!  Don’t be discouraged, though.  We can help.  Or, we can weed out the short sales for you.  There are still plenty of Orange County foreclosures to buy, too!   That’s a blog post for a different day 🙂