When it comes to representing home buyers that are looking to make an offer on a home in the Metro Detroit Real Estate Market that is listed as a short sale, I always advise my client that there are so many variables and factors that can easily change the outcome and final sales price.
I had a call yesterday from a client who asked me the question “Who determines the listing price when a home is put up for sale?” My answer was “It is up the home seller”. I followed up by also letting them know that it is ultimately up to the investor/lien holder/bank on what the final sales price will be. Before a bank will accept an offer on a short sale, there are two critical steps in the approval process of a short sale being approved.
- Is the home being sold at market value. The investor will always have an abbreviated version of an appraisal done on the home prior to accepting the sales price. The bank wants to minimize their loss and this is one of the safe guards the bank does to ensure that a home is not being sold below fair market value.
- Does the seller/home owner have a hardship that can be documented and most importantly, will the lien holder accept this hardship a reason on why they should allow a short sale to be granted. I speak with so many home owners that contact me wanting to sell their home as a short sale and this is always one of the first questions I will ask. Just because you are underwater on your mortgage, or owe more than what your home is worth, is not determined as a hardship in the eyes of a bank.
No matter what side of the transaction your on in a short sale, whether you’re a buyer or seller, these are two factors that need to be considered carefully before you invest 4-6 months since this is the average time it takes for most banks to approved or decline a short sale. Make sure you know what the fair market value is of the home and make sure you find out if the seller has a valid hardship.