The nature of St George Short Sales have changed in both time and in how they are processed. They are less risky than they were before. Typically there is no earnest money required and either buyer or seller can "walk" anytime without penalty, prior to the third party approval(s) of the bank(s). Being a lot faster, short sales now take between 1 to 4 months typically. It is not unheard of that one takes much longer, so be careful. But most are 1 to 4 months now. Depending on if there is a short sale intermediary, like I have, when conducting my short sales as the listing agent, the time can be more like 1 1/2 to 3 months.
Update: Short Sales can possibly affect credit just as bad as a foreclosure. Also, it is not always necessary to stop payments or recommended, in order to initiate a short sale- consult with my short sale specialist; call (435) 674-3600.
If you are a buyer searching short sales, please be aware there is a "Short Sale Status" indicator on every listing and it is descriptive as such: "No" means it is not a short sale. "Active" means that about half the time they are still looking for a primary offer [and on the other half, still they are looking for a backup offer]. "Offer Under Review" means that it already has at least one offer that has been submitted to the bank and they are mostly satisfied they have what they need, either in already having a solid good first offer or contingency contract (contingent on third party approval(s) from the bank(s)) OR that they might also already have back up offer(s). Often, this is when they update Short Sale status from "Active" to "Offer Under Review". Also remember that most short sales have age on them, so it is common that "Offer Under Review" short sales will have multiple "call me back if it falls out" sources for back up offers.
I'm going to give you the short version on how to shop the short sales, then if you want to linger you can. First, get on email updates and quit thinking your going to pull one out of the regular listings. Two, get a good REALTOR® you can call immediately on the new ones and have your pre-qual letter ready to go. Three, have your REALTOR® do an anlysis of value on the property and be educated enough to tie it up with an offer in the first four real hours of the first available email update. This may mean your educated enough perhaps, in some situations you can take a look at it later. I do not advise thinking you will like it without looking at it, but if you know that you do, and your too far away, then just act and get into the details later, of looking it over etc. Particularly if you are not local to go see it or if you cannot get out to see it right then within the first few hours, I've seriously still been too late on some of these, even then! This is the long of short on how to secure one. Please see our form below to get on email updates.
Yea, how to navigate the St George short sales, that's always fun! If you've noticed most of those being "Short Sale Status: Offer Under Review", then your more astute than most buyers. They can be tempting, to think they are still Active, when in fact they already have offers on them- you'd be correct in those cases. The way to get in on those is through email updates on short sales. Most out of town people will come for a trip. Then, if they can find what they are looking for, great! If not, they at least have a great feel for if a short sale comes up that looks better than anything they saw in person, they'll often possibly put an offer on one without seeing it, then worry about coming to see it after that. It is kind of how the west is won on short sales. You pretty much have to be a gun slinger on those, like within the first 4 to 24 hours when they come out is sometimes how fast you have to be to compete and perhaps secure one. I know this because I list a few short sales and that is how fast they go.
Everyone in the know is on email updates so they can respond the fastest. Pretty much, it is those that secure it in the first few available hours, that gets it. This is of course before everyone else has time that day or too late in the next day, in event of getting the update at night, to be able to react and get in on it. Often listing agents will allow time, rather than letting it go to the first one too fast, just so they can have those further contacts for backup potential. Still I have often been a day late and dollar short, enough to know that many go with the listing agent honoring a full price offer quickly. Perhaps the clever ones have it already under contract, by just offering a high enough price, but cutting about the only discount the bank gives anyway. The bank sends out an appraiser and make people come up close to it anyway. Make sense?
By the way, you don't have to pay a dime to REALTORS® when you are buying, but you get double dipped when you sell. Kind of nice to know. Yet, most people just don't use that REALTOR® , like they could be. "Brian, can you call on these three short sales, I know they say Active, but could you really find out if they do or don't have an offer yet and what the scoop is?" Smart! "Sure! No problem!" Easy as pie! (Brian, that's me, at: (435) 674-3600).
Regarding these four listings:
You'll notice that the Short Sale Status column (which you will get when shopping on my site), the last column, shows how that two of these listings area already Under Review ("UndRV"), meaning they are wrapped up with at least one offer on them and most will have several other back up offers on them. One offer on them is enough to make them 'kind of a waste of time' in my view, but I am willing to research or call them for you to see how solid the first offer is on them, if you ever like.
The fourth listing down, really is an Offer Under Review (this one says it in the Public Remarks, most will not disclose this) and is a good example of how many, maybe as much as half of all "Active" or "Actv" short sales, really are not "ACTIVE" but rather should say "Offer Under Review". The reason why they don't update it? Basically, they would "fool you" by leaving it ACTIVE so as to be able to "reel in" more buyers into "back up" offer positions, which allows them to resort to those back up offers if their first one ever falls out. It is NOT that many of first offers fall out, BUT that when they do, they sometimes have to start all over in the 2 to 3 month 'waiting game' process before the banks or third parties, that need to give approval to the seller for the short sale, are now 'turning their attention' to that short sale and finally getting around to sending an appraiser out to appraise the property, WHICH costs them money.
So, for sellers it is all about favoring the first offer as under contract and FRUITATING a queue of back up offers on it so that time and money is not wasted WHEN the bank turns THEIR attention onto that property. In lower price ranges, being a back up offer is about as fruitless as can be for you however, very few ever make it into a line up (see below heading that discusses it). It is much better spending your time on the short sales that are JUST coming onto the market as NEW short sales. Then, in order to be successful, most of the time, you have to jump all over it on the first available time/day it comes out, in order to try to secure an "EXCLUSIVE" first position offer/buyer/contract on a short sale. This is the "name of the game", for me to educate and put you in the "front seat" on short sales, if you want to 'play that game'.
I'm here for you on any of them or to help you set yourself up on email updates if we don't already have you setup on them, which you can do automatically on my site. You just have to register, then log in, run a search, "Save" that search, then enter "Home" up top, which is your portal. You'll see the search that you've saved. You then check the little ticker box at the top of that search to 'send you email updates' on any searches you've saved- in this instance hopefully it is exclusive to the short sales OR that on your email updates you could readily see that it is a short sale.
Word to the wise- act fast! Basically, the price gets set off the appraisal that gets called in, so you are not normally working so much with the asking price on the properties anyway, period. So, ANY short sale will do as long as you like that home- just put a FIRST OFFER on it and get it into first position being submitted to the bank. You can deal with "price" issue [when we first put in the offer I will send you comps, like properties that have sold], but mostly when the appraisal gets done, they START negotiations on the real price you have to buy it at, if you want it. Hopefully the gap is close enough they will just accept your offer. On short sales, your better off to deal by putting a reasonable offer price if you are trying to beat out others. Sellers do counter offers and the extra day it takes them to counter your 'too low of an offer', also allows time to go by for pehraps other offers to come in and competer with yours. If you had been reasonable up front, you might have avoiided competing with other offers.
On short sales, you pretty much need to be the first offer submitted, in order to even be seen. In other words, they only send that first offer to the bank AND work with it to the end. The bank only defers or asks about back up offers IF they cannot get them to come up enough first. Even then, the listing agent, he/she will first tell the first offer about the banks intention to 'sink ship' with them and turn to back up offers as a final notice before turning to a back up offer. The back up offer never does get submitted in almost all cases, but sits in a file the listing agent has; nor does the bank want it, as it jams up the already 'stacked' workflow. This is also how they get something done, by honoring first offers and not "shopping" back up ones. This is what gets offers in the door and submitted before the home were to go into a foreclosure auction through attorneys, that the bank would then have to pay for. Foreclosure is the banks last resort too- as word would have it, most of them now would prefer to short sale it too. This is good information for you to have perhaps.
The key then is to be on email updates for Short Sales and to jump on them, with me, your agent, right when they come out. The video below tells how to configure your search for "Active" Short Sale.
Now, you can be the first offer. Back to talking about the bank. They pretty much will take and run with an offer, if it is close. On short sales, people are finding the banks do require their own appraisal and do require people to come up to appraisal or close to it, although sometimes the appraisal will, in theory (and our hope), be at what foreclosure prices have been selling for. I hope this helps you on the short sales.
How to Search the St George Utah MLS while navigating St George Utah Short Sales.
If you are a seller, our St George distressed properties 101 "class" can help with a basic backdrop education on the subject. Our buyers may want that "class", but this page you are on now is more for how buyers can navigate all the many short sales that are on the market.
For Sellers, my understanding is that current Utah law does not allow the bank to come back after the seller for the difference or deficiency owed the bank in a short sale. Often a St George Short Sale Deficiency Waiver is obtained. If you are a seller contemplating doing a short sale, then visit Short Sale My Home St George Utah.
This will most likely be a short read on back up offers. Back up offers are most often a waist of time, except when your able to discern through a call that there might be a chance on a particular one. The other exception is on properties that are over 250K or 400K. I put 250K as a threshold for too rich for the masses to gang up on and therefor it is getting worthy to call on them. Second, I put 400K because it is even more the case that often the situations involving so much money to expend resource and opportuntiy cost for those involved, that more occasions do arise to have the initial offer fall out, such that assessing back up conditions and offer potential could be way more advisable. Have me call on them.
You need a good agent! This is NOT a sales pitch. OK, the reason is that you need some tenacity and expertise in how questions get asked and what questions to ask, such that you are not just waisting precious time that could be expended in so many more effective ways to secure a deal, like through jumping on all the new ones that come out. That can be exhausting already. Here is why whether or not you should be spending a lot of time on back up offers- it is often so hard to get at the truth of a situation. Here is an example conversation on assessing back up offer availability and strategy when calling on a short sale with offers on it already.
The very first common buyer mistake is seeing short sales on the market and thinking it to be a more potential sale than they really are WHEN the first offer on the place typically is the only offer they work with. As such, this marks it as a Short Sale that should have been updated by now to Offer Under Review status. It may not reflect that precisely on purpose- to facilitate more calls and winning buyers to be able to take you and buy something else with you. What is the best way around this? Have me pre-screen them by calling on any and all Short Sales you begin to become interested in, to find out what the 'real availability' is for you on them. Be sure to mouse over our 'Raiders of the Lost Ark' picture to the right for a true message.
Basically a Short Sale is when the debt owed on a property is greater than the current fair market value of a home and the owner or Seller of the home wishes to sell the property in what we refer to a Short Sale. In doing so, the seller of the home will most often petition the bank with a hardship situation or a hardship letter. This now typically takes place once the seller has the first offer on the property and the entire package of hardship letter, financial's, etc. gets submitted to one, sometime two banks or more lien holders that may possibly be involved. If you are a potential distressed seller as such, for expert advise, please call me, Brian, at (435) 674-3600. If you are either a buyer or seller, please check into this Short Sale Disclosure as it describes what a Buyer typically gets as part of putting in an offer on a St George Short Sale.
Regarding the realtor setting the price lower than usual- it can be a bit of a "mirage in the desert". As such, you need to know, that once the bank sends out for an estimate of value (typically after the First Offer and a long wait), either through a Broker Price Opinion (BPO) or an appraisal, then every anxious participator (ONLY the FIRST OFFER) can be 'called on price' to come into better line with reality- the banks reality. To be fair, most realtors have started to price Short Sales more realistically, precisely because they do not want to have incubated things that long only to see things fall out over the price having been so unrealistically too low. But the price being set too low is still done. You just have to weigh each one out. I can help if you like.
Technically, you can shop other properties after putting an offer on a Short Sale (this is done less seriously since the timeline is shorter on them now) and you put NO earnest money down as well. So, you are out nothing and you can cancel or rescind your offer anytime. There is also a 'waiting too long' deadline or drop-dead deadline you put on the Short Sale addendum that can hold a ray of hope that you could get a response before that time. Please be aware, nobody or no bank pays much attention to it. Basically, beyond the deadline, that you write into the offer, the offer becomes void[able] or ‘dead as you have wished or wish it to be'. This actually comes in handy after a certain point, but usually in terms of you having gone a different direction, found something else, etc., that you then do not have to worry about closing that one off (a formal cancellation addendum).
When you put an offer on a Short Sale, it is still understood that you could still be shopping the market and possibly even putting an offer on something else. If it is another Short Sale, then you can keep both alive. If you want to put an offer on a regular property it is advisable to cancel your short sale as part of that so that your are not Double Contracted. You can 'play' the rest of the market in keeping your options open too. More and more however, Short Sales have more confidence of going through and people therefore also tend to follow through more on them also.
In the past, I regarded that there is little chance of them ever going through. This has changed if you are the first offer to come on the place. Of the ones that do get done my guess is 80-90% actually sell. Other variables of it not going through include: Seller has renegotiated with bank for new terms for lower loan payments, seller found a way to pay debts and stay, or sellers examine their overall 'bankruptcy like' condition and can actually deed it back to the bank as a foreclosure.
Still, unrealistic expectations will ensue on Short Sale regarding what gets expressed to the buyer. Often on short sales the buyer will be told one thing and another different thing happens. Often this is not your Realtors fault. Sometimes things take longer than planned on. Still, Short Sales take less time than they used to, perhaps some are done between 1 to 4 months now.
The key is to be the first offer. If it already has an offer submitted the question becomes, "What is the chance of a backup offer getting it? First you need to know WHERE back up offers go once they are submitted. Do you see the picture on the right?
Unless your Realtor has been told of some likely chances of the first offer getting tired and having gone and bought something else. A back up offer typically has a slim chance of working out. You need to have your agent check it out first. IF it has been investigated by your Realtor as a situation where the first offer is strong enough on price and the financing or pre-qualification letter looks in order and that the time line looks for a good response from the bank, everybody's time is better served moving on. There may be a temptation in cases where you believe it could be a long wait for the primary offer, therefore the chances of them backing out and you becoming the primary offer are greater, or so you may think. But please remember there is possibly a stronger variable to consider. Namely, if the primary offer can find something better before waiting that long, YOU most likely will too. Also, if there was a better house at a better price, you should have gotten it right? Given these conditions, experience tells me, unless there is some indication the first offer is not going to hang in there, I give you about a 1 in 10 chance of having it "stick", either because the first offer is sticking it out, or of something better coming along, or of that Short Sale going into foreclosure first. If you were a Realtor, would you even want to show one of those, that already had an otherwise good offer on it? Yet it is not uncommon to have a person coming into town having a whole list of these to show. It is because that buyer did not know that many of them will possibly already have the first offer on them. What should you do as a buyer? Please call ahead of time to find out what you really have in a Short Sale opportunity- your realtor can look into the "real" availability for you.
A few important questions exist to ask the listing agent on Short Sales. Other tell tale signs can be ascertained by a good St George Realtor, like myself. One is how far along the road toward better turn-around times we can anticipate in hearing back once an offer is submitted. Of such questions I like to ask are probably in this order and varies depending on the situation of course:
On the good side, good responses to these questions leads us down a far better road than what some have traveled.
Just for example, let's say there are a first and a second mortgage/lien holders on the home. Sometimes the seller will have spoken and received agreement with one lien holder regarding short selling the home, but is or has not been in as much communication with the second lien holder who usually stands to lose more on the deal. Remember, when people were getting a loan, it might have covered 80% of the cost to buy, then a second loan or second lien holder would sort of come up with the rest. Only it would be at a higher interest rate for the extra risk. For if the home depreciates in value, instead of appreciating and if the home should be sold, they could recoup their investment money, should the buyer be unable to suffer the depreciation (cover the loss) of value upon a move.
The problem is that the second lien holder, whom everyone needs a consenting approval to the seller to sale the home, 'drags their feet', such that they demand more than the going rate of $3,000 to sign the papers. What you need to know, is that you might have First Lien approval to Short Sale the home, the major stake holder doing the 'Jedi Wave Blessing', thus getting the major go-ahead right? Not necessarily. Often, now-a-days, even in literature supporting a futuristic "faster" way Short Sales will be conducted in the future, to the tune of them inundating the market in potential droves, that the problem of the Second Lien Holder Approval is as difficult as it is becoming known to be, even more difficult sometimes. Basically, it can be all over the map on what some of them demand in a pay-off. My most recent one is $5,300. How did they pick that number? Well! You heard the truth I believe when I say- NO REASON. Normally, I've heard $3,000 is standard. Finicky cat I tell you AND just ask, they HAVE and CAN kill a deal and send it into foreclosure. Where in the heck do you think all our foreclosures came from? Most of them were short sales at one time. However, second lien holders can't be too fussy, because if it goes to foreclosure, they get nothing.
The alternative is for the first primary lien holder to force the home to go into foreclosure where upon the home is stripped of all lien holders in an auction of the home going to the highest bidder, or in most cases, the largest stake holder. Subsequently, because the primary lien holder has more at stake and can usually get their money "back out", they then tend to be the highest bidder at auction- as a St George foreclosure or NOW as a genuine "Real Estate Owned" REO bank home.
Be aware of such, that when the seller starts marketing the home, he/she/their Realtor, might market it lower than they otherwise would, to get offers into the door- after all, it will not be their loss. This is being done less often. If it is, remember, this does not mean a higher price will not be expected eventually by the bank or '3rd party approvals' involved. When they do get around to looking at that first offer, they then have sent out for a BPO (Broker Price Opinion) or an appraisal on the property. At this time, offers may then have to come up on their price, in order for the home to be sold. To be fair, Short Sale Realtors are pricing homes more reasonably. Don't worry, most Buyers get something for the wait. Some might say it could well not be worth the wait. Most now will say that it is. Trying to monitize it for you, I'd say as of June of 2012, you could expect 5K off on properties under 220K and maybe a bit more for properties above.
You've been told about them ahead of time. Now, after that, I'm happy of course to play the Short Sale game with you from an educated basis by calling on each individual one. The short sale game has changed and stream lined. It is not the same game- it is much easier and doable now. I've had quite a few I've been able to get accomplished. Whether to get help for buying or being resuscitated after trying to buy or sell one, I can help!
I await your call or email me from here.