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Doug White & Kip Swan
Keller Williams Salt Lake 2121 S McClelland Street #201 Salt Lake City, UT 84106Get Directions
Let us start with a story. There were two couples, one wanting to buy a house and one wanting to sell a house. By some chance meeting, they get together and the first couple that is looking to buy a house decides that they want to buy the other couple’s home. Sounds like a meeting made in heaven. As it turned out it was more like a meeting made in hell. It was a good example of “if something could go wrong, it will”. For starters the house was overpriced, the appraisal didn’t come in high enough to do the deal, the credit of the buyer wasn’t good enough to get the loan they wanted, and the buyer didn’t do a home inspection and later found serious issues with the roof after closing. You get the point.
Both of the couples could have avoided most of the problems had they hired the services of a Realtor®. The two couples would have had the advice and expertise to guide them through the whole buy/sell process and steer clear of the traps they fell into without using an agent.
What about “Short Sales”?
Well, well. If you are looking to buy any home you will likely run into a number of properties being sold as "short sales". Some buyers love the home they got that was offered being sold as a short sale. Other buyers (and sellers) have had bad experiences in buying or selling a home as a short sale. Let’s start off by explaining what a short sale is. If the value of a home is less than what is owed on it and it is for sale, then it is a short sale. You ask “how can a seller sell the home if they owe more on it that what it will sell for. There are two answers here, one of which applies. The seller may have cash reserves where they can pay the amount short to do the deal. Or, the lender or lender is willing to take less than what is owed on it so it doesn’t have to foreclose on the property.
A seller may choose to sell short to avoid foreclosure and “protect” their credit from be ruined. It is better to avoid having a foreclosure on your credit history in almost all cases. The caveat here is that the creditor(s) that suffered a loss may come after you at a later date to collect what it lost and/or they may report the amount they suffered as a loss to the IRS on a “1099”. That amount is considered income by the IRS. Ouch!
So the seller would be wise to check out their particular situation before they get involved in selling their home as a short sale. We highly recommend using the services of a professional to do this. The professional here would be a law firm specializing in representing clients in a short sale transaction. The cost is nominal in light of the potential for disaster if you don’t use a professional. An additional advantage is that you are more likely to succeed taking this path since the professionals have established “contact” with lender that are often able to move mountains that otherwise may not happen.
Ok, so what about someone interested in buying a short sale. The news here is to proceed with asking a lot of questions. The downside you should be aware of includes:
85% of offers on short sales fail.
Short sales are offered for sale at artificially low prices
The average time to do a short sale can run into months, like four, five or six months
Often the short sale seller kills the transaction when they fail to provide documentation needed to do the deal.
A lot of buyers can’t wait that long to purchase a home and often back out when they find a regular home that they can close on in thirty to forty-five days.
The agent handling the sale for the seller or the agent handing the buy side for a buyer doesn’t know what on earth they are doing and run into all kinds of delays from lack of experience.