A buyer could have purchased dozens of homes throughout their lifetime but a short sale will be the first time they get to purchase one on a hay ride.
It really doesn’t matter how much a buyer or seller is prepped for the short sale process, there is always a point of shock and disappointment when it just doesn’t happen in the motion picture like version playing in the imagination.
The price the property gets listed at and the price that it gets contracted at is more or less only considered a guideline. You may as well make that purchase price another item on the wish list, just above the new Berber carpet you’re hoping to get installed, too.
Ninety-nine percent of the time, the bank involved or the loan servicer has absolutely nothing to do with determining the price a short sale is listed at or contracted at. It’s all subject to review, appraisal and discovery.
When the seller of the home decides to sell the home, for whatever reason, and they owe more than the home is worth, they list it for sale with a plan to ask the bank for debt forgiveness. When the bank approves the short sale there is generally a laundry list of financial and time sensitive demands that have to be met in order for that sale to go through.
Most of the items relate to how much is going to be paid toward other closing expenses and how much the bank will net at closing … down to the penny. The last statement I reviewed had $.02 at the end of a six figure settlement demand. I consider that irony because the sellers, figuratively and literally, weren’t left with two pennies to even rub together.
The glow of the home purchase starts to fade somewhere around the line where there is a figure of payment to the condo association or homeowner association. The demand calls for $3,500 maximum to be paid to the association at closing. In reality, there is a little more than that outstanding in back fees and someone gets to make up the difference.
When the seller can’t or won’t ante up, all eyes fall on the buyer who has engraved the contract price in their brain and is offended and shocked to learn that in order for the closing to occur they just might have to contribute funds to get the property closed.
In dramatic fashion, the wick is burning at both ends and the property will go to foreclosure in a few days if this doesn’t happen.
The last buyer I shared this sort of situation with felt that it was a shake down. Is it a shake down if the “subject to third party approval” purchase price plus the extra cash needed for fees is well below recent comparable closed sales and is still less than what is currently available on the market at this moment?
Surprises and expecting the unexpected, which may include unknown fees, are the cost of doing business with short sales. They’re not asking for the first born child to get the back fees squared up at closing, just a short stack of Benjamins.
Besides, the first born are usually promised to the attorney who issues the eleventh hour estoppel to the homeowner association, anyway.
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Chris Griffith is a real estate agent at Downing-Frye Realty Inc. in Bonita Springs. If you have a question about local real estate or Bonita Springs, e-mail her at chris@LifeInBonitaSprings.com.