Questions To Ask Before Submitting A Short Sale Offer

Due to the current state of the real estate market in the Twin Cities, economic conditions… short sales are probably here to stay for awhile. There are some challenges to short sales that can be overlooked.

I’m touching on this topic because I have been showing quite a few short sales lately especially in the southwest metro and these questions have been on top of mind.

These little transactions can be fairly pesky if you don’t have somebody that actually knows what they are doing. Although ‘most’ real estate agents will claim these days they are experts because they took a class or claim to complete X% of short sales they list. Don’t be fooled by trickery.

By asking some questions up front, you have a better idea of what you are getting yourself into and therefore your short sale transaction is less likely of being derailed. Although it might happen later on down the road

Is the listing agent experienced with short sales? Provide proof
Who will be handling the short sale negotiation?
Has the short sale package been submitted and noted receipt from the bank?
Do you have a point of contact at the bank? Is there a loss mitigator assigned to the file?
How many banks/creditors/etc involved?
Who are the name(s) of the lender? Is it FHA or VA?
Does the loan have private mortgage insurance (PMI)?
How many liens are currently on the property?
Has the borrower/homeowner quit making payments on the mortgage(s)?

These are questions that should be asked before you submit your offer on a short sale in Minnesota. The reason, simple… you the buyer need to make an educated decision when it comes to writing a purchase agreement on the property. You don’t want to get stuck in a transaction that you might not have the time for.

Issues affecting short sales being completed

Many agents as well as lenders have absolutely no idea what they are doing when it comes to getting a short sale accomplished. I seem to think that when banks want to fire somebody, they place them in the loss mitigation department that handles short sales. Banks lack staff and suffiecent training. A lot of short sales are lucky if they even close. By the time the lender digs through the stack of files on the desk getting ready to sign off, the redemption period is over the bank then has control of the property.

There really isn’t any uniform way of handling short sales. Each lender handles it differently and there really isn’t a streamlined process in place.

Sometimes a second lien holder will hold up the approval of the short sale in order to get more money before releasing the lien. It doesn’t make much sense because they can hold up the the sale and then the house goes into foreclosure, which results in nothing.

Having a buyer’s agent that knows what questions to ask can really save you in the long run. Hopefully this helps out and provides some cost or time saving advice.