The Long and the Short of Heber Valley Short Sales

Last week I was fortunate enough to close what I refer to as my 'career'Short Sale in the Heber City. (I thought it was going to take my entire real estate career to close it). It took a year and two months start to finish.

So why did it take so long to close and why is it everyone wants a short sale?

Perhaps I should start by defining a Short Sale. Simply put, a Short Sale is an event whereby the sale must be approved by the Seller's lender because the property is selling for less than what is owed. The Seller is usually distressed, usually behind in their mortgage payments, and usually upside down on their equity. It is a last resort effort before foreclosure. Because of the rapid escalation in homes values over the past few years, Short Sales in Heber and Midway are common place, and usually attract a lot of attention from home buyers and investors alike. I have many Clients that insist I only show them Short Sales. The perception is they will get a better deal at far, far below market value. The reality is (in many cases) they do not.

The Long:

1. Plan on a minimum 3 – 9 months for the bank to review the offer. The process usually begins only after an offer has been submitted. There is little the Seller can do to expedite the process until they have an offer.

2. Expect long periods with no updates or information. Banks work on their own time frame, regardless of everyone else's motivation to close quickly.

3. Many banks will want to review the highest and best offer until end of escrow. Some will only review one offer at a time, so as one falls apart, the file is closed and a back up offer is submitted, meaning the entire process often starts over again.

4. With Short sales, there are no guarantees. The price in most cases has been established by the listing Agent to attract an offer and to postpone the foreclosure process. Accordingly the Agent usually prices the home below market value, so making an offer significantly lower than list price has little chance of being approved, and every chance of being beaten by an offer during the review process. (Trust me, I've learned the hard way, but have now established an offering technique that prevents this from happening.)

5. Many times a property has not only a mortgage, but liens or judgements attached to it. If this is the case, everyone with a recorded interest must first approve the sale. Usually liens are negotiated to a reduced payoff. If there are two or more mortgages, every mortgagee must approve the sale. All of this can add further delay to an approval.

The Short:

1. Don't expect a bank (or Seller) to entertain a contingency offer (like you have to sell your home first).

2. Be sure you are preapproved and can close in a 30 day period from written approval by the bank. Drawn out escrows are usually not acceptable.

3. Cash speaks volumes. Cash or finance used to be 'all the same at the Closing Table'. Now with tighter lending standards, more hoops to jump through, and more uncertainty, cash will almost always beat a financed offer, even if the cash offer is slightly less than a financed deal.

4. Put your best foot forward and make your strongest offer up front, otherwise risk missing out altogether with no opportunity to negotiate price. With Short Sales, banks don't usually entertain multiple offers at the same time.

5. Just because it's a Short Sale, doesn't mean its a bargain. Do your market research or have us do it for you. We know the Heber real estate and Midway real estate markets better than most.

6. Work with an Agent experienced in Short Sales. It does make a difference and it will improve your chance for success. Many Agents will say they are qualified, few can proven it.

7. Don't rule out looking at traditional listings over Short Sales. If it is a Short Sale, then someone has no equity. If it's a traditional listing, then the Seller may have more room to negotiate than a bank might be willing to give up.

8. Most banks will approve a Short Sale at or near market value. They won't typically approve a Short Sale without some really compelling reasons and market data to back it up. They also have to justify the sales price/loss to their investors.

In summary, the path to Short Sale success is riddled with land mines. Properly negotiated, they can yield some excellent opportunities for Buyers and some much needed relief for Sellers. Mismanaged, they can be a frustrating experience for all parties with nothing to show in return.

**Above is painting with a very broad paint brush, and exceptions to the norm do exist. Usually it's a matter of being in the right place at the right time, and having an Agent familiar with a specific property history and circumstances. Heber and Midway still have some tremendous Short SAle opportunities available. Let me know if I guide you to the perfect one.**