Ahhhh, Temecula short sales…whether you love them or you hate them, they are here to stay. Most Temecula CA home buyers have absolutely no idea what goes on behind the scenes of a short sale, and often find themselves frustrated with the lengthy process.
Having closed over 100 short sale transactions during this Temecula CA real estate foreclosure market, my team and I are well versed with the short sale process. So, let me pull back the veil and shine some light on what goes on behind the scenes.
A short sale is a common real estate transaction in which the homeowner (typically behind on payments and severely under water on their mortgage) requests that their bank accept less for the home than what is owed on the loan.
Red Tie Short Sale Example:
Harry Homeowner bought a brand new house in 2005. He paid nearly $500,000 for a beautiful home in Temecula CA using an adjustable type of mortgage. A few years after he moved in, the interest adjusted, and the value of the home plummeted, he now finds himself behind in payments. The extra kicker to the gut is that his beautiful half million dollar home is now worth $250,000 in today’s real estate market. Ewwww…ouch!
Harry doesn’t want to foreclose on his home, although his bank is threatening to, so he decides to list his home as a short sale. His listing agent then collects the vast amounts of paperwork and financial documents required by his lender, and the agent markets the home for a buyer. Once an offer is received, the offer and financial hardship package is sent into the lender…along with the hundreds of other short sale packets that were also submitted.
The bank, being short staffed and overwhelmed with foreclosures, then takes that package and uploads it into their system (this process takes anywhere from a week, to a month…sometimes longer depending on the lender’s efficiency.)
Pretty soon a few weeks go by with no word from the bank. Out of nowhere the bank will call the listing agent and arrange for an appraisal to be done on the house. Once that valuation is completed, the file is then assigned to a short sale negotiator with the bank. Most negotiators, on average, work between 50 to 200 files at a time. They are instructed by the bank and their superiors to work on the most crucial files first, and then work their way through the rest.
The short sale negotiator then gets to the file. Problem is, the valuation is now out of date because they took too long to get to the file. Thus, they reorder another appraisal.
On and on it goes, until finally the bank submits the file to the investor for final approval of the short sale. As soon as the listing agent has the approval from the lender(s), escrow can finally begin and normal escrow closing occurs.
Sound like a mouthful? You bet it is. Short sales are a great way to get a home below market value. But you need to be patient. If you are in a position to wait as long as needed for that perfect home, then a short sale could work for you. But, if you want to move in the next 30 to 60 days, then you can pretty much cross short sales off of your list. Patience is king with short sales.
If you need an agent that has successfully closed short sales in Temecula CA, then call me and I will walk you through it. I know how to get the job done and make it fun. (951) 790-2253.
Temecula and Murrieta Ca Real Estate Solutions – John Butler, REALTOR
The Bald Guy in the Red Tie, John Butler, is Exit Realty’s #1 Realtor in the Temecula/Murrieta, CA area. John uses humor and knowledge to make your real estate transaction both fun and successful. Watch the comical adventures of the Bald Guy & Temecula/Murrieta real estate on YouTube.
He can be reached directly at (951) 790-BALD or (951) 790-2253.
View more Bald Guy blogs about Temecula CA at www.baldguyhomes.com