Penny Liu

Frequently Asked Questions about Short Sale

There are numerous books and articles written about Short Sale. You can easily find them on the internet. This page will just try to answer the most frequently asked questions. If you have questions that are not answered here, please feel free to call me at 626-890-9218.

1.      Why does it take so long to buy a short sales take property?

a.     Because there are more parties involved in the process. First the seller has to agree to sell you the home. Then all the lenders have to agree on the sales and how they are going to divide up the money. Finally if there are any insurance companies, they have to agree on the sales too.

b.     There is no guarantee the bank will ever approve of the Short Sale. There is no way anyone can tell you exactly how long it will take the bank to respond to the Short Sale. 

2.      Can I buy the property at the listed price? How does the bank determine the Sales Price?

a.     Most of the time, the way the banks determine the sales price has very little to do with the market value of the home. It has more to do with how much money the seller owes the bank, how much savings the seller still has, and how many banks are involved.

b.     Be prepared for the bank to counter at a price above market value and/or ask for a cash payment outside of escrow.

3.      Can I make other offers as I am waiting for a Short Sale approval?

a.     Yes and it is highly recommended.

4.      What happens after the Short Sale is approved?

a.     Once the Short Sale is approved, the transaction proceeds similar to a normal equity sale. Escrow time is what was originally agreed on in the purchase agreement. You cannot move into the home until escrow closes.

5.      What is the different between buying a Short Sale home vs a Foreclosed home vs vs a Normal Equity sale?

a.     Short Sale Property – The bank will generally NOT pay for any repairs, termite inspection or home warranty.

b.     Foreclosure Property - The bank may or may not pay for any repairs, termite inspection or home warranty. The bank is exempt from giving the buyer any disclosures since they never lived in the property before.

c.     Equity sale – Seller will generally pay for termite inspection and home warranty. Repairs are negotiable. Sellers will give full disclosures to buyer.

 

  penny@pennyliu.com                             (626) 890-9218