Frequently Asked Question’s
1. How long does it take to close a short sale?
Closing time on a short sale can vary widely, depending on the bank, the listing agent, and the seller. Larger banks have a tremendous back log of short sales; any given worker for the bank can have a case load with hundreds of files. So expecting your file to move quickly is not very realistic, expect a 3-6 month wait. That being said, there is a new law that is proposed to take effect on 4-30-2010 that will require the banks to respond to an offer within 10 days, time will tell.
Listing agents have little control over the short sale process; the one major piece they control is the number of offers that are submitted to the bank. It’s always best when the listing agent only submits one offer at a time to the bank. The real benefit here is that yours is the only offer the bank is working with; when an agent submits multiple offers you never really know where you stand in the process…does someone else have a higher or better offer?
The seller is the person that needs to get the ball rolling. They must request a short sale packet from the bank. They must complete the packet accurately and completely in order for the process to move forward.
2. Can you negotiate the price on a short sale?
Yes, you can always try to negotiate a better price.
3. Will the bank accept the price on my offer?
Even though you negotiated a price with the seller, ultimately it’s the bank that will set the price. During the process, the bank will request a Brokers Price Opinion (BPO). BPO’s are completed by third party brokers; essentially they do a comparable sales price appraisal and try to set an accurate market value for the home. From this point the bank has a fairly good idea of the market value of the home and then will negotiate.
4. Who pays for the buyers Title insurance?
Often times the bank will request that the buyer use their Title Company and in this case the bank will usually pay for the buyers Title insurance. To the best of my knowledge there is no law that requires you to use the banks Title company, it just seems to be standard practice today. Banks like to use their Title Companies to insure quick closing, that doesn’t always mean accurate or timely service for the buyer. On many occasions I have suggested that the buyer use their own Title Company, this ensures accuracy and due diligence for the buyer. It may cost you a little extra upfront, but it may also save you a bad headache in the end!
1. Are foreclosures the best deals on the market?
Surprisingly, not all of the time. From my experience, the market is moving very fast in south east Florida. There is a huge interest in foreclosure homes and often times that leads to bidding wars, which in turn drives the prices up. Often if you take the time to scouring the market for traditional re-sales you can find a home in better condition at a better price. At the same time, it’s easier to negotiate with a motivated seller. Keeping that in mind, not all sellers are realistic with their sales price and may not be willing to accept today’s market values. A good Realtor will guide you towards the right home at the right price. In today’s market, no one is willing to over pay for a home!
2. Can you negotiate the price on a foreclosure?
Yes and No. In South East Florida the market is moving very quickly and often the prices are raised simply because multiple people are bidding on the property. In some cases you can find a house where there is little interest, often the bank will negotiate. Keep in mind that these homes are probably not located in your ideal neighborhood or in mint condition.
3. Will the banks make repairs on the property?
In most cases no, you are buying the property “As-Is”. This means you are willing to accept the home in its current condition without any repairs.
4. Am I allowed to have an inspection done on the property?
Absolutely, usually you are allowed 5-10 days to perform an inspection and during that time period you are allowed to back out of the contract if the house isn’t in acceptable condition. Time is of the essence with inspections, don’t delay or you could be on the hook for a home you may not no longer want to buy!
5. Who pays for the buyers Title insurance?
Often times the bank will request that the buyer use their Title Company and in this case the bank will usually pay for the buyers Title insurance. To my knowledge there is no law that requires you to use the banks Title company, it just seems to be standard practice today. Banks like to use their Title Companies to insure quick closing, that doesn’t always mean accurate or timely service for the buyer. On many occasions I have suggested that the buyer use their own Title Company, this ensures accuracy and due diligence for the buyer. It may cost you a little extra upfront, but it may also save you a bad headache in the end!
General Real Estate Questions
1. What is Title Insurance?
Title insurance in the United States is indemnity insurance against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens. Title insurance is mainly a product developed and sold in the United States as a result of the comparative deficiency of the US land records laws. It is meant to protect an owner's or a lender's financial interest in real property against loss due to title defects, liens or other matters. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy.
2. How long do I have to make the home inspections?
Generally speaking you have between 5-10 days. All contracts are written differently so make sure you read the fine print. Usually, you can withdraw from a contract within that time period if the inspections turns up repairs that you are not willing to undertake.
Tax Credit Deadline
1. What’s the deadline?
To qualify, first-time and repeat buyers must have a binding written contract by April 30th and close by July 1st.
2. How much money is available?
The maximum allowable credit for the first-time home buyers is $8,000. The maximum for repeat buyers, also referred to in the legislation as “long-time residents” is $6,500.
3. What properties are eligible?
The Extended Home Buyer Tax Credit may be applied to primary residences, including single-family homes, condos, townhomes, and co-ops.
4. How do buyers get the benefit?
Buyers can apply the credit to their 2009 tax return, filed on or before April 14, 2010; file an amended 2009 return; or apply the credit on their 2010 return, filed on or before April 15, 2011.
5. Who qualifies?
To qualify as a first-time home buyer, the purchaser or his or her spouse may not have owned a residence during the three years prior to the purchase. To qualify as a repeat buyer, current home owner must have used the home being sold or vacated as a principal residence for 5 consecutive years within the last eight.
6. Are there income limits?
The new law raises the income limits for people who purchase homes after Nov. 6 2009. The full credit will be available to taxpayers with modified adjusted gross incomes up to $125,000, or $225,000 for joint filers. Those with MAGI between $125,000 and $145,000- or $225,000 and $245,000 for joint filers- are eligible for a reduced credit. Those with higher incomes do not qualify.