5 Most Common Complaints of Short Sale & REO Buyers
1 . R u n - o n ( a n d o n , a n d o n ) e s c r o w
Roughly 40% of the homes for sale on today's market are short sales and foreclosures! Distressed properties are well known for their value (a reputation which is sometimes accurate, but most importantly.. sometimes not). Did you know they also have a reputation for causing buyers to become distressed too.Transactional snafus, last-minute surprises and long, drawn-out escrows that never close seem to be par for the course.
Instead of avoiding these properties altogether, get educated about the most common dramas that go down in these deals, and how you can avoid falling victim
When you’re buying a home (or selling one, for that matter), time is absolutely of the essence.Buyers reasonably expect that the big time suck in real estate is in the house hunting process itself. It seems like once you ﬁnd a home you want to buy and the seller agrees to your price and terms,things should move pretty quickly, right?
Not so much, when it comes to some distressed property sales. We’ve heard of the occasional, swiftly-moving escrow on an REO (real estate owned - by the bank), but for the most part, these transactions take anywhere from a few days to a few weeks longer than “regular” sales, because of the extra signatures, supervisor-level approvals and even investor involvement required to seal the deal. Banks don’t have the same sense of urgency individual home sellers do, and it’s not uncommon for the people who need to sign on the dotted line to be on vacation or scatteredacross the country, adding days or weeks worth of time to the escrow.Short sales are also an entirely different animal when it comes to escrow timelines. While a standard sale from an individual seller to an individual buyer might take 45 days from contract to closing, a short sale can take anywhere from 45 days to 6 or 8 months after the seller has accepted the contract to get the deal closed
A v o i d t h e d r a m a b y :
Expecting your escrow to run long, and being pleasantly surprised if it doesn’t. Expectation
management is everything. Make sure you take these extended timelines into account when you’re working with your mortgage broker on the issue of when to lock your interest rate, and how longyour rate locks will last. You might even need to plan on and/or set aside an allowance for the cost of extending your low interest rate if rates are rising rapidly during the time you’re waiting for the deal to be done.
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