Buying a Short Sale Property in Arizona has become much easier over time, though not every short sale is the same. There are a lot of determinants involved in a short sale, and the more information you have, the more authentic your experience will be. Here are the top 7 inquiries you should make when buying a short sale home in Arizona.
1. How many extensions of credit are associated to the short sale, and which banks are servicing the line(s) of credit?
A short sale involving multiple loans with different banks can be extremely more arduous and time consuming than a short sale with only one loan or 2 lines of credit with the same bank. Typically a line of credit that is not primary will only get a few thousand dollars when the sale closes, since it is abolished at foreclosure and would get nothing. Even so, second lines of credit can still demand more and can make it go to foreclosure if not receiving the requested amount. It may be even more challenging if the second is a HELOC-a loan which involves taking cash out against the equity in the home. Often, this type of extension of credit wants a minimum of 10% which the primary loan holder may or may not agree to.
2. Are there any other liens impacted?
If there are any Homeowner Association holds on the property, contractor liens, IRS holds on the property etc. this could possibly extend and make the short sale procedure arduous or even unattainable. The majority of the time banks will not cover these claims on the property, and the seller may not be able to or unwilling to cover these debts. Often, the seller will ask YOU, the buyer, to absorb these costs.
3. Does the Seller have an obvious hardship?
Banks will want proof that the seller has an authentic hardship, which may include loss of employment, reduced income, increased debt, medical issues etc. Sellers that cannot exhibit hardships are often asked to commit funds to the sale with an upfront payment or a promissory note. In some of these cases, sellers will opt for foreclosure (which nullifies the short sale) as it is more accommodating to them.
4. Who is representing the short sale?
If the listing agent is the one negotiating a short sale, you can look into their involvement with and successfulness in arbitrating for short sales. On occasion it is an Attorney or outside company bargaining-which you can also inquire on their participation with / favorable vs. not so favorable outcomes. An enthusiastic and seasoned negotiator will really increase the successfulness of the short sale.
5. What condition is the property in?
Nearly all short sales are sold AS-IS, attesting to the seller is not offering any warranties on the property and probably will not do any restorations. If you are exercising FHA or conventional financing, there may be repairs that are required to obtain your extension of credit. Since the chances of the seller furnishing them is not probable, the responsibility would be yours.
6. What are the Comparables on the house?
A lot of listed short sales are not approved at the list price, and must get acceptance from the bank. The bank will either order an appraisal or a BPO (Broker Price Opinion) to obtain the market price of the home. If the assessment comes in above the purchase price, the bank will typically counter your offer. Analyzing the last 3 months active, pending, and sold houses should give you an idea if the price is in line with market value.
7. What is your timeline for closing?
If you are looking for a fast close, purchasing a short sale home in AZ may not be a good fit. The average timeline of a short sale is 60-90 days, though it could be much faster or much slower depending on the factors above.
Short sales will continue to be a influential part of the market here in AZ for years to come. Buying a Short Sale Home in Arizona may be a desirable way to get a wonderful home or investment property at a great price.
1. How many extensions of credit are associated to the short sale, and which banks are servicing the line(s) of credit?
A short sale involving multiple loans with different banks can be extremely more arduous and time consuming than a short sale with only one loan or 2 lines of credit with the same bank. Typically a line of credit that is not primary will only get a few thousand dollars when the sale closes, since it is abolished at foreclosure and would get nothing. Even so, second lines of credit can still demand more and can make it go to foreclosure if not receiving the requested amount. It may be even more challenging if the second is a HELOC-a loan which involves taking cash out against the equity in the home. Often, this type of extension of credit wants a minimum of 10% which the primary loan holder may or may not agree to.
2. Are there any other liens impacted?
If there are any Homeowner Association holds on the property, contractor liens, IRS holds on the property etc. this could possibly extend and make the short sale procedure arduous or even unattainable. The majority of the time banks will not cover these claims on the property, and the seller may not be able to or unwilling to cover these debts. Often, the seller will ask YOU, the buyer, to absorb these costs.
3. Does the Seller have an obvious hardship?
Banks will want proof that the seller has an authentic hardship, which may include loss of employment, reduced income, increased debt, medical issues etc. Sellers that cannot exhibit hardships are often asked to commit funds to the sale with an upfront payment or a promissory note. In some of these cases, sellers will opt for foreclosure (which nullifies the short sale) as it is more accommodating to them.
4. Who is representing the short sale?
If the listing agent is the one negotiating a short sale, you can look into their involvement with and successfulness in arbitrating for short sales. On occasion it is an Attorney or outside company bargaining-which you can also inquire on their participation with / favorable vs. not so favorable outcomes. An enthusiastic and seasoned negotiator will really increase the successfulness of the short sale.
5. What condition is the property in?
Nearly all short sales are sold AS-IS, attesting to the seller is not offering any warranties on the property and probably will not do any restorations. If you are exercising FHA or conventional financing, there may be repairs that are required to obtain your extension of credit. Since the chances of the seller furnishing them is not probable, the responsibility would be yours.
6. What are the Comparables on the house?
A lot of listed short sales are not approved at the list price, and must get acceptance from the bank. The bank will either order an appraisal or a BPO (Broker Price Opinion) to obtain the market price of the home. If the assessment comes in above the purchase price, the bank will typically counter your offer. Analyzing the last 3 months active, pending, and sold houses should give you an idea if the price is in line with market value.
7. What is your timeline for closing?
If you are looking for a fast close, purchasing a short sale home in AZ may not be a good fit. The average timeline of a short sale is 60-90 days, though it could be much faster or much slower depending on the factors above.
Short sales will continue to be a influential part of the market here in AZ for years to come. Buying a Short Sale Home in Arizona may be a desirable way to get a wonderful home or investment property at a great price.
About the Author:
I have personally been negotiating short sale homes for nearly 5 years, and will say they have become much easier to deal with-though not always! I have helped many buyers purchase short sale homes throughout the years, and will behappy to answer any questions you may have. Please contact me by clicking here www.ScottsdaleRealEstateNow.com
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