Are you sure that you are ready to buy that Short Sale house?

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This is a post that every buyer who is interested in purchasing a short sale should read.  Short sales are time consuming and if you’re in a rush to get into a home, the short sale is a long process with much WAITING.

Via Chris Eckert (Keller Williams Realty):

Are you sure that you are ready to buy that Short Sale house?

Short Sale House

 

I recently listed and sold a single family home on a Short Sale in my area. It proved to be a VERY frustrating 5 month experience for the Buyers, Sellers and both Real Estate Agents.

 

The first frustration was that it took 3 months for the lender to approve the sale.

 

Once the short sale was approved, the buyer ordered their General Property Inspection and the Pest Inspection. (The custom in San Mateo County is that Sellers have inspections prior to putting the home on the market. Short Sales are a bit different. Since the Seller is losing their house and will not make any money off of the sale, they have no incentive to pay for inspections.))

 

The buyer’s inspector found Dry Wood Termites in the house, plus some damage to the wood framing. The buyers insisted that the wood be repaired and that the house be treated for Dry Wood termites (tented and fumigated), prior to the close of escrow. The seller of course, was not going to pay for this, so we submitted for approval from the Bank. This took 3 weeks to get approved.

 

When the lender originally approved the sale and before the buyer’s inspector found the dry wood termites, the seller decided to move out of the house.((Without consulting with me, the listing agent first)).  The seller figured that the sale was almost done, so it made sense to them to move out and leave the house vacant.

 

During the 3 weeks that we waited for the bank to approve the termite work, someone broke into the house and stole the air conditioning unit. Because there was no one living at the house to water the lawn, and there were no automatic sprinklers, the lawn turned brown and died.

 

The bank, after 3 weeks of waiting, finally approved the termite treatment and repair work.  While the repair work was being performed, the contractor found that the house had subterranean termites in addition to the dry wood termites that we already knew about. Subterranean termites require a different type of treatment, which the bank had not agreed to pay for. Rather than wait another 3 weeks for approval and risk losing the already impatient buyer, both Real Estate Agents agreed to pay for the subterranean treatment out of their own pockets.

 

By this time, the buyer’s lender was aware of the termite infestations in the house. The buyer’s lender required that we receive a clearance from the Termite Company saying that all of the termites were gone. The Termite Company had to rewrite the clearance letter 3 times, before the buyer’s lender would accept it. This delay took an additional week.

 

At this point, we now had everything that we needed to close escrow on this sale. The seller had moved out and left a lot of personal items in the house, including an old refrigerator. Both Real Estate Agents agreed to have the house cleaned out, at their own expense, and the buyer agreed to keep the old refrigerator.

 

Yeah….we just closed escrow!!!!!!!!!!!

 

Not so fast….Escrow closes at 11:00am. At 5:00pm that same day, the buyer excitedly shows up at the house with her Real Estate Agent, only to find that the old refrigerator has flooded the kitchen and attached garage.

 

Who is going to pay for this? The seller is gone, they have moved out of town. The seller’s insurance company is no longer covering the house after the close of escrow. The buyers do have insurance, but there is a $1,000 deductable.  After lots of threatening, the agents agree to pay for the deductable, so that the buyer doesn’t feel totally ripped off by the whole deal.

 

The lesson for the buyer and the buyer’s agent. Make sure that you and your client know that they are in for. Yes, you may get a property for a below market price, but is it worth the long wait and all of the frustration?

 

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Chris Eckert

About susanmorrison

After living in Walpole, MA for many years, our family was transferred to the west coast when I was a senior in high school. In 1983, I graduated from Mission San Jose High School in Fremont, California. I am also a 1987 graduate of Providence College with a major in liberal arts and a minor in business administration. I bring to the table many years of sales experience beginning with thirteen years in Corporate Sales at Delta Air Lines. I'm the mother of three children and I'm very active within the Franklin, MA community. I am also a cancer survivor and support the American Cancer Society Charities.

My husband and I have built five homes and I've lived in a variety of other locations including Toronto Canada, Irving Texas and my current home in Franklin, MA. As a result of all my moving around, I came to the conclusion that I was an expert at moving...why not become an expert on the other side of the table? I earned my real estate license in 2004 and believe that I have found my true niche'. I can empathize with my clients on a variety of levels; whether they are buying or selling. And, like so many other good realtors out there, I believe that possessing good communication skills is one of the many keys to success.

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