March 2, 2012Sarah Stelmok, ABR, GRI, e-Pro
Many people in the market today are first-time home buyers who would not have been able to buy when home prices were higher. Enticed both by lower prices and bank promotions, these eager hopefuls are have taken the signs of deals as the best chance to make their first real estate move
1. How long does it take for a bank to approve a short sale?
· Multiple liens on the property
· A third party negotiating the short sale on behalf of a seller. Some states allow third parties to do this, for a fee; some states, like Virginia, limit this to real estate licensees, attorneys, and employees of attorneys.
· Private Mortgage Insurance (PMI) on the property
· Additional investors
2. Will the bank make repairs to the property?
· The bank does not have possession of the property and has no authority to make repairs on behalf of the seller.
· Many short-sale sellers do not have the financial means to make repairs.
· Many banks require the short sale to be sold strictly “as-is” and do not allow the seller to pay for any repairs.
3. How do other types of debt affect the short sale outcome?
· Surprisingly, tax liens are probably the easiest to clear off the title. The IRS has several avenues to collect back taxes, and doesn’t want to become a real estate holding company. Removing a tax lien can take up to 120 days, so it is imperative that this process is started well in advance of the short sale.
· Medical liens can usually be negotiated and a payment plan worked out. However, this is a time-consuming process and needs to be started as soon as possible.
· Mechanic’s liens are a little harder to get removed. There is not much recourse for tradespeople and bad debts.
· Child support judgments are also difficult to remove because they usually involve government agencies.