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Archive for January, 2011

Home Buyers In Oakland County Michigan Real Estate………Contingency Offer

In the past it wasn’t uncommon for home buyers in Oakland County Michigan to need to sell a house prior to purchasing the new home. “Back in the day” everybody had equity, prices were increasing rapidly, and just like in any market, properly priced homes sold. So there wasn’t a huge risk when the seller accepted an offer subject to the sale of another home. Often called a 72 hour contingency.

Basically the way it worked: Buyer makes an offer with acceptable price and terms and subject to the sale of the buyer’s current house which would need to be listed with an agent. If somebody else came along before the buyer sold his house, the buyer would have 72 hours to perform or back out. If the buyer’s house sold first, then he would just remove the 72 hour contingency clause and proceed to close.

Sellers didn’t have anything to lose. Their house was still on the market, values were going up and it didn’t seem like there were any distressed sellers back them.

Now days we haven’t been seeing 72 hour contingencies at all. Prices are declining and sellers don’t want a 3 day obstacle for a potential qualified buyer.

So- after a 4 paragraph intro we get to the topic of this post. Contingent offers on distressed sale homes, AKA short sales and foreclosures. First of all, banks will not accept an offer contingent on the sale of another home. Banks tend to price for quick sales and aren’t willing to wait for your house to sell first. If you need to sell first, don’t even look at bank owned homes.

I can’t say definitively that absolutely no short sale listing will accept a contingent offer. But I can say the majority won’t. Once the bank approves the short sale they expect to close quickly; they aren’t going to wait around for your house to sell and close. I don’t even know if a bank will look at a short sale with that contingency attached to the offer.  Also, short sale sellers tend to be under the gun to get the house sold. Many are facing foreclosure and time is of the essence.

If you need to sell your current home in order to purchase the next one, the best advise I can give you is to sell first then purchase the next home subject to the closing of your current home.

Kari Trail Butz……..Realtor……….Buyers Agent
Keller Williams Realty………………Hawley Team
Direct Mobile………………………..248-459-9789
Email:                                 Kari@BuyMiHomes.com
Website:                            www.BuyMiHomes.com

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Oakland County MI Home Buyer- That Short Sale Approval is Also Subject to the Seller’s Approval of the Short Sale Terms

 

There are many facets to a short sale………this blog brings up a point that many seem to forget…….SELLER approval of the BANKS APPROVAL………sound confusing but it’s not.

Most listing agents of short sales, good or bad agents, will insist on a clause in either the purchase agreement or an addendum, stating that the sale is contingent upon seller and lien holder approval of the short sale. If the listing agent doesn’t demand something along those lines in the offer then they shouldn’t even have a license. So there is really no getting around the fact that the seller needs to approve the short sale terms.

When representing a seller, one of the conditions that should be fought for is to have the bank(s) agree to release the seller from liability for the deficiency. Basically they should insist that the bank put in writing that they won’t sue a seller for the short fall.   Every Seller should be prepared that they may have to come up with some money/funds or sign a note, or both in order to get the banks to agree not to sue them. Not every listing agent is going to prepare their seller for this possibility (probability)……if the Seller has not been properly counseled it may kill the deal …………….the Buyer does not get the home they have been waiting for and must start the process all over again.

The facts are, if you make an offer that is accepted by the seller, and one of the contingencies is a short sale must be approved by the bank(s) with terms the seller can accept, there is a very good chance the house will never close if the listing agent isn’t a very good agent (unfortunately the Buyer, nor the Buyers Agent have any control here!). In the meantime you will have sat around waiting and hoping interest rates don’t go up too much and hoping that property values don’t go up too much (and they HAVE started going up), and hoping that some agent you know nothing about can get a very difficult job done to the satisfaction to both the bank AND the seller.

And if that agent can’t get the job done, then you get to start all over again.

Short sales are NOT for the faint of heart or for anybody on any kind of time line to move. Before you start looking at homes, you need to have a long talk with your agent to decide if you even want to look at short sale listings.

Short sales have been on the rise in North Oakland County MI over the past year. Short sale closings in Lake Orion for example, more than doubled in 2010 from 2009– from 32 to 74 short sale closings. Often times a short sale is a terrific deal. They have to be for the trials and tribulations they put everybody through.

Kari Trail Butz……………Realtor
Specializing in Home Buyer Representation
Cell:          248-459-9789
Email:      Kari@BuyMiHomes.com
Web:         www.BuyMiHomes.com

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Short Sales in Southeast Michigan- What to Expect

Short sales in Southeast Michigan- What to expect, including my attempt to define exactly what a short sale is and the basic steps involved. Below is more about what to expect throughout the short sale transaction.

Short sale listings can be some of the best bargains available in Southeast Michigan, but there are things about short sales that the Southeast Michigan home buyer should be aware of prior to even looking at houses.

  • Be prepared to wait 3-6 months (sometimes longer) for short sale approval
  • Be aware the lien holders may not agree to the payoff required to proceed with your offer. After 3-6+ months your offer may be countered or outright rejected
  • Don’t expect appliances to stay
  • Don’t expect the seller to pay for repairs
  • DO expect to close pretty quickly once the short sale is approved

One of the first things everybody involved in a short sale needs to understand is that the banks are under no obligation to approve a short sale. The banks are better off accepting a reasonable offer on a short sale rather than foreclosing, and I haven’t had one denied yet, but that doesn’t mean they are never denied. There are factors beyond the control of the buyer or buyer’s agent.

  • We can’t control how cooperative the seller will be with the bank’s demands addressed in more detail here
  • We can’t control how knowledgeable or diligent the listing agent is
  • We don’t know from day-to-day what financial incentives the government will offer the banks which can determine what short sales they approve
  • When there are multiple mortgages we don’t know how well the negotiators for the first and the second will play together or the abilities of the listing agent to ref them
  • The seller can also reject the terms of the short sale which will be addressed in detail in another post

In a nut shell– short sales can be a good bargain but for the right buyer. You need to have the patience of a saint and the ability to move on someone else’s schedule.

Kari Trail Butz…….Realtor
Keller Williams Realty, Clarkston
cell: (248)459-9789
Kari@BuyMiHomes.com
web: http://www.BuyMiHomes.com

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