Update on Virginia Short Sales--Good, Bad & Ugly Curveballz!
Quick History of Short Sales in Northern Virginia
When I first wrote about Northern Virginia short sales October 2007 (scroll to bottom of article for bulleted advice) they truly were the wild wild west of real estate. I mean seriously there were no rules and the best advice was run like heck away from any and every short sale. The norm was a desperate seller looking for a guinea pig contract to take to their bank and bef for mercy asking the bank to accept less than the balance on the mortgage note. The bank would take 4-12 weeks to respond to the contract on the table while the buyer hung in limbo so they could almost always receive a resounding "No!" from the bank. So the buyer just got punk'd and lost 2 months of their looking time. Here's your advice for short sales in Virginia and Fairfax County area.
Typical Short Sales Scenarios You Will Encounter
- See the "quick history" paragraph above. They represent about 75% of short sales. Although that used to be 95% of short sales. It's just that in the past year a lot of realtors have gone into this niche market to build relationships with the banks and the banks have added staff to handle the volume. So short sales are still be to be viewed with a healthy dose of skepticism. Another sub category of these are tons of short sales that are actually under contract already but still listed as ACTIVE due to the ignorance of so many listing agents regarding MRIS policies. This is truly one of the most annoying things out there in real estate right now as it causes much wasted time and effort sifting through listings unnecessarily by both consumers and productive selling agents (buyer agents).
- The listing agent with some experience in short sales has already begun the process of "communicating" with the bank and negotiating with an official BPO--broker price opinion that the bank will later use in deciding whether to accept an offer or counter offers received if they decide to allow a short sale. These are often going to get sold and close...you may have to be patient with the process waiting for 2-6 weeks for an answer. About 10% of them.
- Pre approved short sales--yay the good kind! These are quite similar to foreclosures in that you're dealing with desperate sellers but the bank is making the calls/decisions and are doing so in 24-48 hours as far as counter offers or accepting an offer is concerned. More and more short sales are pre approved thank goodness--perhaps up to 15% of them.
So the key is to screen the short sale listings ahead of time before wasting any of your time. After all time is $$$. And some short sales are great opportunities. My wife and I are buying one now and have negotiated them paying 6% towards our closing costs to buy down our interest rate to 4.75%. Finally a
big kitchen! Update on the new home--bank has just said a month out that they will only pay 3% towards closing which means I now have to bring an extra $4000 to table to have a 0.25% HIGHER interest rate than I would have. I tell you this to illustrate how "living and breathing" a short sale ratified contract is. It can change along the way in many ways....
HOW DO YOU SCREEN THE LISTINGS?
Well I highly recommend working with a real estate consultant (that nasty "realtor" word that David Lereah and the NAR drove into the mud) who has a lot more info on houses through the agent remarks of the listings versus the internet/public remarks. Often I can screen for good and bad short sales and tell you the whole story on a listing--not to mention help make your search more efficient while keeping it hands off to respect your boundaries.
When you're ready to buy do contact the JustNewListings.com team and I'll protect your financial interests in buying a home....
10 Questions to Ask Before Showing a Short Sale
This list was written by friend and competitor Frank Llosa of Frankly Realty and it appeard in the Washington Post in 2008. This Sunday Feb 21, 2009 the JustNewListings.com team will be in the real estate section of the Washington Post for the 3rd or 4th time in the past 18 months.
Can you please answer the following questions:
- Have you closed a Short Sale before?
- Have you requested and received the short sale package from the bank, including the hardship letter?
- Have you sent the package AND have you confirmed receipt?
- What communications, if any, have you had with the bank?
- Has the bank approved the list price?
- Have you received any other offers that you are waiting to hear back from the bank on?
- Does the loan have PMI on it? (Private mortgage insurance)
- Is there one or two trusts? Any other liens?
- What are the names of the banks? Are these FHA or VA loans?
- How long do you estimate that the lender will take to provide an answer to an offer?
- (new) Has your seller completely stopped making payments on their loan.