Kary brings up an excellent point here.
“One other agent short sale issue is going to pop up shortly, if it hasn’t already, but it will be a buyer’s agent issue. The $8,000 first time home buyer credit needs a property to close by November 30. Making an offer on a short sale property, without advising a first time homeowner of the risk of not closing by the deadline is probably malpractice. It’s sort of a “suitability” issue for real estate.”
It’s not outside the realm of possibility that falling in love with a short sale today means the transaction may not close by Nov 30, 2009. I suppose there might be a chance that the tax credit will be extended or even expanded. Yet many homeowners with Option ARMs were given verbal assurances that they would be able to easily refinance.
I wonder what life is going to be like inside loan servicing during the month of November, when the pressure will be sky high to get these short sales APPROVED so the buyers can make the closing deadline?
Great points. Short sales present a real opportunity for first time buyers getting savings on homes, but the tax credit timeline is a real affordability issue for most of them.
Jillayne,
In a short sale a buyer usually reserves the right to cancel anytime prior to lienholder approval. Sometimes we “park” at a SS and keep looking, and move over to a better option IF one comes along.
The $8,000 credit is great…but buying the wrong house isn’t worth $8,000. You go for the house you want. No one should be putting the $8,000 credit ahead of the other aspects of buying a home.
Jillayne,
In a short sale a buyer usually reserves the right to cancel anytime prior to lienholder approval. Sometimes we “park” at a SS and keep looking, and move over to a better option IF one comes along.
The $8,000 credit is great…but buying the wrong house isn’t worth $8,000. You go for the house you want. No one should be putting the $8,000 credit ahead of the other aspects of buying a home.
Most everyone thinks the credit will be extended, and possible upgraded to include all buyers. There’s a bill floating around with 3 provions in it, including upgrading the amount. But most think the amount won’t go to $15,000, as proposed, but will at minimum be extended.
Until we get final word on that, we do have to act as if November 30 is the cutoff. Many erroneously think it ends December 31, so we need to get a reminder in there sometime in September, unless it’s extended by then.
I have an awesome short sale story to tell…if it closes. A couple of them. But one in particular about a young man whose agent wouldn’t put a short sale offer in for him. I hope he gets it…was signed around yesterday and Lynlee’s working on the HUD 1 for the lien holder.
Jillayne:
Timely!
What is the average in this area for a short sale approval and closing?
In my experience, it is 4 plus months (one is still pending after 4 months). I do not have enough data to establish an average.
But, if it is is 4 months, we are getting near the limit today!
Good call!
Roger,
If the seller already had an offer and the buyer flaked in month three…the next buyer could go quick. So it’s a case by case scenario.
I have one I started the other day that I expect to go fast because:
1) The lienholder is a local WA Bank
2) The lienholder already approved one, but the previous buyer walked.
It’s not a case of averages, as that will lead people to walk away from all short sales. The prices obtained for a buyer via a short sale are often (not always) too good to write them all off as “too late”.
In many cases the savings is well, well, WELL over the $8,000 credit. So let’s keep our heads in the game here.
A larger lesson may be derived from this.
Lending programs come and go (more going, lately), lending guidelines change (mostly more restrictive), and we can never assume that what is available today will be available indefinitely (Option Arms, stated income, 100% financing, not sure we knew they were going away back in 2005).
Of course, it is always possible that something better will come along tomorrow, and I do like to remain hopeful, but cautious.
Make the best decision you can, live with it, make another. Repeat, as long as you are able.
Ardell:
Good point. The $8K credit may end up being the tail wagging the dog!
Interesting you should characterize it as borrower “flaking” in month three…so what is a reasonable and respectable waiting period? The wording suggests longer.
It’s all about managing expectations, and finding the right opportunities, like the one you described.
They gotta be out there.
Do listings ever reflect that kind of opportunity?
“Short Sale Preapproved at Listed Price, Previous Buyer Flaked in 3rd Month!!!”
That could be an attractive MLS headline 🙂
I’m hoping that RE Agents will keep in mind the holidays and county furlough days in November…it’s going to be a challenging month for escrow officers…especially if you factor in the November 30 (current) deadline for the FTHB tax credit.
I’d highly recommend that RE Agents consider having their purchases close by mid-November instead of risking missing the 11/30 date AND the added stress with the volumes that may be taking place.
Mortgage originators should probably keep this in mind if they have refi’s closing towards the end of November…might want to close first part of December instead…the cost of a slightly longer lock will be worth the reduced headache for you and your clients. Escrow companies will have to (and I think always should) prioritize purchase closings over refi’s.
Hi Rhonda,
Thank you so much for constantly reminding us of the November challenges. Will you do a post for us in Sept to remind everyone again?
Certainly–unless Tim wants to write a passionate plea. 🙂
139 days as of today before the tax credit goes away. Fence-sitters need to make a decision soon. Not to mention the nice decline recently in interest rates.