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How to Win or Lose Multiple Offers when Buying a Home

I hear this all the time from home buyers, especially first-time homebuyers. I am tired of losing a home in multiple offers. With buyer demand, low interest rates and inventory shortages, multiple offers have been a standard in the home buying game, especially in competitive marketplaces and in the first-time buyer more affordable homes category of the market.

Home buyers never win in a multiple offer or bidding war. You don’t know what the other buyers are doing, what their financing is, how many of them are there. It can get very discouraging for home buyers. But, if you want a home and are in it to win it, you can’t be discouraged. You just need a strategy.

Timing is everything. Home buying in a competitive environment is no exception. The cream of the crop homes don’t last long. Beating other offers to the punch could make the difference between a sole negotiation with you and the seller and a multiple offer, so you need to know what is out there and go see it right away. Get into the home right away, even if it is inconvenient, do it. Keep abreast of the market by having your Realtor send you updates on the multiple listing service MLS 2x per day, morning and afternoon, that way you have the most accurate and updated listings available.

And you need to be ready to make a quick decision. Be prepared with your preapproval letter ready. Have all the decision makers attend the first showing. Waiting for your parents to come even the next day and you could be behind the eight ball. While it is important to make a wise unhasty and considered decision, you need to know your marketplace, do your homework and consult your Realtor expert so you know when the right thing comes along.

Don’t submit a low ball offer. That is the first way to lose a home to multiple offers. If you are offering on a fast-moving in-demand home, don’t try to negotiate too much and go really low. Home sellers can consider other offers up until you have a signed (not verbal) contract. If you low ball to try to get the price down, you will lose the home – guaranteed. If another offer comes in, you will definitely pay more to get the price. In a multiple offer, the list price usually becomes the rule, so you sometimes need to get right on it, close to it or over it to win the house.

Again, timing is the biggest factor. Homebuyers always need to consider the market, but not over consider. Remember, if you are getting a loan, and most people are, the home’s value will need to appraise. As a homebuyer, you can never overpay for a home. If you think the price is too high, much better to have no competition in negotiating after an appraisal than keep missing out. Yes, homebuyers do need to pay for the appraisal, so there is some chance of loss, but most times sellers will negotiate once they have a buyer. If you are not sure, have your attorney extend the inspection period and do the appraisal right away, then you can reduce potential risks and losses.

Other terms of the purchase can also be a way to win in a multiple offer. Cash maybe king, but the price is the main consideration to most home sellers. The only way to beat a cash offer is to outbid them. But if you are a cash offer or put more money down, that can be appealing to a seller. Conventional financing is usually more appealing than FHA financing.

Home seller concessions like closing costs, surveys, termite inspections, home warranties and percentage of tax proration can be another way you can beat out the competition. Down payment assistance or relative gifts can be one option other than seller paid closing costs. You can get your own termite inspection, survey and home warranty or do without them. Most financing options no longer require termite inspections and survey. Established homes with obvious boundaries do not necessarily need a survey. And unless your inspection reveals an potential issue with termites, you may not need. VA loans still however need a termite inspection, but it can be provided by the buyer.

Tax prorations are usually a small consideration, but combined with others above, it can win. Depending on the current exemptions, assessment and tax increases and since your lender escrows your taxes at closing and each month, you may not ever have a dime out of your pocket for a tax proration at 100% vs. 5 or 10% over the last tax bill.

Offering to buy the home “as is”. You should always still have an inspection and you still have the inspection contingency in place in a contract, so if you say you will purchase as is and there are deal breakers at the inspection, you can always renegotiate. With other buyers moving onto other deals by then, you may be on your own. You shouldn’t go into the deal with this plan to about face on this term, but you still have options.

There are always pitfalls with the appraisal or as is back up plan though. Backup offers could be in place, so the home seller may just go back to that, but other buyers may not wait around and move onto other homes.

Other terms like favorable closing dates or post-closing possession may suit the home sellers needs and favor your offer.

And if you are tired of the multiple offer game and don’t want to play anymore, there are other options. Very few times does a diamond in the rough have multiple offers. Could be the home a little old lady lives in that is in good condition, but is not updated, could be a foreclosure home. You can get a rehab loan to fix up the home the way you want. You still get your dream home and often a better price and less frustration.


Appraisals are a necessary component of getting any home approved for a loan when buying or selling a home. Cash deals do not require appraisals but loans, which comprise most home deals, DO require an appraisal which needs to be valued at least at list price.
Appraisals for buying a home and selling a home have both objective and subjective components.
Market value – Appraisers consider 3 of the comparable properties in the last 6 months against the selling home. Which comparables they use are subjective, but the comparables are objective. This is 80% of the appraisal value.
Adjustments – Similar home type, square footage, immediate area (subdivision or town), school district…these are the criteria generally used by appraisers to establish comparable properties, but minor adjustments can be made to ensure a fair appraisal when selling a home. Adjustments for finished vs. unfinished basement, number of bedrooms, number of baths, number of garage spaces ad whether attached or detached, type of siding on the home, age of the home, lot size, condition/upgrades, and whether or not a home is distressed (foreclosure or short sale) all can factor into an appraisal when selling a home. All these adjustments have guidelines, but the adjustments and the amounts are subjective. Upgrades and lot size usually take the hardest beating on these adjustments and never really get a real and true value. If you have an acre and other homes are subdivision lots, don’t expect the price of the lot itself to be accurate in the adjustment. It will be a fraction, mostly due to the flat vacant land market and difficulty in value. The same is true of exceptional upgrades. You may get a superior value, which will help, but it will not be the cost of what you paid. So, if your home is over-upgraded for your market, compared with similar homes, it will be a fraction of what you paid for the upgrades. This is usually around 10% of the appraisal value.
Condition – Totally subjective. Appraisers would not have seen other comparable homes, but can see pictures on the MLS. They assign a poor , fair, average or superior rating. This can affect 10-15% of the homes value. Also, if you have an FHA loan, there are some repairs that would be required to be done before the home can be loanable. This is subjective but also is

required by FHA requirements. These are all generally safety requirements. Roof condition, GFI outlets, etc.
Frequently asked questions about appraisals when selling a home.
If a neighbor with a similar home sells their house undervalue just to get out, will that hurt my homes’value? Yes, if it is not a short sale or foreclosure, there will be no adjustment.
If the house does not appraise, can the buyer pay extra to meet the agreed price? Sometimes, it depends on the lender and the type of loan. However, it is often difficult to convince a buyer that they should pay over value for a home. Also, they would need to have extra cash, since any payment over the appraised price would need to be in cash. Not the difference between the loan amount and the appraised value, but the appraised value and the purchase price of the home.
Who pays for the appraisal? The buyer
Does the seller get a copy of the appraisal? No, unless they are asking for a price adjustment as a result of the appraisal.
Does the appraisal amount stay with the home if a deal were to fall through? Possibly. If it is an FHA loan and the lender files the case number and the appraisal, then the appraisal – bad or good – will stay with the home for up to 6 months.
How to basements count toward assessed value. Whether finished or unfinished will count, however, walkout, lookout basements are still considered below grade, even if one foot is below grade. The square footage, qualified bedrooms and bathrooms will still only be counted at a percentage of their total worth as compared with above-grade.
So, it really doesn’t matter what you, your buyer, or the agents think of the worth of the house. It only depends how it stands up to similar homes in the area.

Housing Trends…in-law arrangements in homes have made multigenerational buyers more common

Home buyers looking for in-law arrangements in homes have experienced sharp increases in demand putting sellers with the potential for in-law arrangements and suites in a great marketing position.

Parents are aging and sometimes costs of care and other complications require adult children to take them in. But on the other side of the generations, high cost of renting, divorce and difficulties finding jobs have resulted in necessity for in-law arrangements adult children and sometimes their families to live with the folks too.

In many cultures, multi-generational living is commonplace, but it is new to the masses in the US.
What multi-generational buyers are looking for are ways to have a complete or partial living arrangement for either side of the familial spectrum, while maintaining a comfortable separation, when needed.

Older parents coming out of their own living arrangements are often the most difficult to accommodate. They are used to living on their own, so “downgrading” to something less than what they had on their own can be a sore subject.

They will at minimum want as much of their own separate space as can be provided. Private bedroom with on-suite bath (usually no tub), decent-sized bedroom and closets, sometimes a sitting area and sometimes a kitchen. And usually no stairs.

While basements can often accommodate all this and more, older parents usually can’t or don’t wanted to be relegated to the “dungeon” – even with a chair-lift to handle the stairs. And they want to feel comfortable in the space to live as their own home, not like they are intruding.

Buyers looking for this kind of accommodation will likely have to do some renovation to make this happen. Renovation loans can be obtained in order to make changes, even moving walls, etc. They require a higher level of and come with a bigger interest rate, but the money in the mortgage is cheaper than credit cards. Sometimes the sale of their home can be used for this extra money. But don’t look for sellers to be ok with 2 home contingencies to buy a home. Not going to happen.

However, additions are more expensive and a lot more hassle. Looking for homes with extra 1st floor rooms, like a den, sunroom or 1st floor master bedrooms often can be a perfect in-law suite. Adjacent living rooms can be tapped to make a suite where parents can have privacy to have friends over, etc. If utilizing the 1st floor master, enough space has to be made to accommodate a 2nd master on the 2nd floor.

Many “in-law arrangements” are basement suites. While this will not often suit older parents, it is often perfect for young couple, single or young family needs. They can benefit from the proximity of parents for potential babysitting and save a lot of money with no rent payments, and sometimes better schools and area than they could afford. And they also have a completely separate retreat and living area, which both parents and adult children alike appreciate.

Depending on the family dynamic, the in law may not the final decision maker, but they may have a say in the final plan. Need to plan ahead to ensure you don’t ruin the space so it can not be reasonably reverted if necessary by a future buyer.

Sellers who have this type of feature in their homes or can even offer an idea of how it can easily be done, can certainly market that feature to capture some of these new buyer needs and put their homes ahead of others in the marketplace.

Selling and Buying a Home with Home For Sale or Close Contingencies – Facts and Fiction

If you are selling you home, do you buy a new home first or do you wait until you sell and risk two moves and being homeless. It can be a dilemma and can be exacerbated by complications of a large family or work schedule, schools, transportation, etc.

Once upon a time, buying a home contingent on the sale of your home was normal. When the housing slump occurred, sellers did not have enough confidence in the market that the buyer could sell their home to risk taking their home off the market. Since 2015, that is beginning to change. Sellers are having more confidence in the market, but not total confidence. Here are some facts for buyers and sellers about contingencies.

. You can not purchase a foreclosure or short sale home contingent upon the sale or close of your home. And banks will not give you months to sell and close on your home.
. A purchase contingent on sale or close is a big seller concession, they need to be compensated with a better offer price to risk losing market time.
. Best time to ask for contingent on sale or close is during the winter months. Sellers are not risking as much. . You have better chance and price negotiation on that – still no foreclosures or short sales.
. Do the inspection up front, but not the appraisal. Yes, the inspection costs money but you need to show the seller good faith that you are serious about the deal. Inspection items are negotiable and need to be done within the 1st week of any contract so no one wastes their time.

. Never take a contingent on sale/close contract over a non contingent contract. Yes, you may get a little money more, but it is not a done deal and wasting precious market time can cost you more than you gain if it doesn’t go through.
. Your house is NOT SOLD. There are no sure things here, there is always a risk. Keep showing it.
. Your agent should do a market analysis of the buyer’s home to ensure their home is saleable or closeable to mitigate the risk.
. Don’t compound contingent on sales. So don’t you get a house contingent on sale/close when your buyer has the same situation. And don’t take a contingent on sale/close deal if the buyer’s buyer has the same. Just like dominos, too much risk, it could all come tumbling down.
. Not all sellers should consider a contingent on sale/close. Contingent on close is better, but if you are in a good market and getting tons of activity…..better not to risk it.

The property ladder can not move without someone taking a risk. Contingencies on sale/close can work, but due diligence is required to calculate the benefits and risks. Many sellers and buyers benefit from this, but both must be realistic.

Rehab 203k loans – do they really exist?

Rehab loans exist mostly via the FHA 203k route which allow buyers to loan beyond the amount of the purchase price to either cosmetically rehab homes or do repairs that allow the home to pass FHA guidelines.

Yes, they do exist and recently more lenders are starting to carry streamline FHA 203k Rehabilitation loans to allow borrowers to loan up to $35k beyond the sales price of the home to pay for rehab work.

So, the pink or 70’s shag carpeting can be replaced, the wallpaper or white or bright walls can be repainted, cabinets updated, new tile or hardwood, granite counters installed, stainless appliances purchased, etc. And all can be done at a fraction of the immediate cost through FHA 203k Rehabilitation loans, basically $50 extra per month for every $10k. Yes, it will cost more over 30 years, but less than credit card interest rates and it will happen a lot faster and easier than if you were to save for it and wait and then live in a construction zone. And you will get a deal on a gem of an outdated house.

FHA 203k Rehabilitation loans are a great way to get immediate gratification on that home that ticks all boxes except is not updated and offers buyers a great way to get a good deal on a diamond in the rough.

These FHA 203k Rehabilitation loans; however, are considered high risk by the lenders, and if you think you have to jump through hoops with lenders on a regular deal – double the amount of time, hassle and hoops and that is what to expect.

You have to get a general contractor with experience and who is willing to do a FHA 203k Rehabilitation loans. Although you can get some things done yourself that require no skill and is allowed by the lender and their inspection liasion. Permits need to be filled out and all village codes obeyed and inspected.

You will need to get a contractor right away and they need to be willing to complete forms and comply with all the lender wishes on forms. Usually only 2 draws are allowed – 50% at closing and 50% after completion. Some contractors will not like that. Everyone needs to be licensed for work and everything has to be accounted. You can hire any contractor you want, but they need insurance and licensing, so Uncle George is not likely going to be able to do the job. They can have subcontractors who are licensed.

You usually have 30-60 days to complete the work after closing and then you can move in. You will not be able to live there during the work, that is important to note. Then the lender liaison will approve the work and you move in…. happily ever after.

However, FHA 203k Rehabilitation loans can be tricky for major repairs. Again, high risk becomes higher risk and lenders usually make it very difficult to get this done. Mold or standing water, structural repairs, electrical and sometimes plumbing repairs, or moving or tearing down walls, etc. are very difficult to get approved under this type of loan. Again, lenders try to reduce or eliminate high risks when making loans with the buyer and/or the property. For these kinds of repairs, lenders may require testing or additional inspections and definitely longer review times. This may make foreclosure sellers difficult to get additional time, etc.

FHA 203k Rehabilitation loans ARE possible, but here are a few things you need to know…

Expect at least 60-90 days to close – again, could cause problems with seller, so be prepared and don’t forget the time to close.
You can’t move walls or include pools, furniture, etc. in the streamline loan. There is another type but major reconstruction is really not advisable with a loan.
There are extra fees for the liaison/inspectors the bank will require.
You will start paying the mortgage the month after the closing, so you may start paying even more you move in.
Contractors will delay you. Some contractors don’t like this type of work because of the rules, paperwork and the strict payment and deadline terms. You need to get your contractor bid in before anything can happen, so get everything as fast as possible.
Make sure you get a lender who processed their own loans and can control the process. Lenders who farm this out lose control of the situation and add extra time.
BE patient. The process is very difficult and can be done, but it will be tedious and sometimes not make sense. Remember whoever has the purse pulls the strings and lenders need to ensure the home is worth the extra work.

Millennial Buyers – How to Live for Free

I blog a lot about Millennials because they are very important to every aspect of our economy and housing recovery. One of the millennial trademarks that is unique to this generation is the “boomerang” or “failure to launch” effect of millennial graduates moving back in with mom and dad.

Let’s face it, after the taste of freedom in college, living with your parents as an adult is a little awkward and can be difficult to conduct your life on your terms and spread your wings.

It can have the same difficulties to your parents who don’t keep the same nocturnal calendar as their adult children and are tired of having to tell an adult to pick up their things.

To solve all of those problems and plan for the future, several of my millennial buyers have come up with a new idea that I am calling the Millennial Boarding House.

Instead of living with mom and dad, this formula can be used by smart millennials who don’t want to waste money on rent and want independence. You can be a first-time buyer and create an investment nest egg to move up in the housing market, get government grants and most importantly LIVE FOR FREE. Here is how it works….

1. Use your good credit rating and income to qualify for a nice starter home that has a good price, good area, good schools and is in an accelerating and not a declining area and has potential for future resale. You can do some work updating it if you like or not. The idea is good for now and easy to sell in the future. There are still deals out there and we are in an accelerating marketplace. Interest rates are good. Waiting will cost more.
2. Use government grants through the @Home Illinois program to get $5k in free down payment and/or closing costs.
3. Find a few friends to be roommates and charge them a few hundred dollars each month. Cheap for them and they get independence from their parent’s house or basement.
4. You can live for Free. If you have two or three extra bedrooms, you can charge friends enough to cover your monthly payment and you pay nothing or next to nothing each month to live.
5. You save money by not having to pay anything each month to live, building your nest egg for the future.
6. In a few years when you are ready to get married or start a family, you sell the house for a profit and a nice down payment on your first family house. Or, you keep the house as an investment and rent it out for future income.

There it is, an easy formula for success to start saving money, not waste money on rent and plan for the future. Do yourself a favor and call a Realtor – call me – and get on the path to future equity and success.

Property Tax Game

Property Taxes in Illinois are no bargain…we all know that. When you are buying a house, property taxes in cook county and property taxes in will county are a big factor, but maybe not the only factor. If you qualify for a $200k home a $1,200 higher tax bill each year can make your qualification to $180k. So for $100 more each month in taxes, you can get $20k less home. High property taxes were a significant cause of short sales and foreclosures in Illinois in the past few years. Here are a few things you need to know when it comes to property taxes and buying a home in will county and buying a home in cook county.

Property taxes are based on the assessed value made by the assessor derived from the market value compared to non-distressed comparable properties in the area. Property taxes in Cook County are assessed on 10% of the assessed value of the home. Property taxes in Will County are assessed on 30% of the assessed value of the home.

So why are property taxes in Cook County and property taxes in Will County so different from home to home or town to town? The biggest variance in property taxes in Cook county and property taxes in Will county are from two things.

Schools are the first difference. Schools comprise 70-80% of your tax bill. Mainly that is why property taxes in Illinois are so much higher than other states. Since the burden of the majority of the school budget is on property taxes in Illinois, the budgetary needs of the schools and the values of the homes in the district (more value, more taxes) greatly affect the school budget and sometimes the quality and ranking of the school district. The amount of commercial or industry contributing to taxes without any burden on schools also helps reduce taxes.

The other difference is the town tax rate. Many municipalities in Cook County and some municipalities in Will County are “home rule”. That means they do not have to follow state or county limitations on the tax rate. Basically, they can charge whatever they want in taxes.

When you are buying a home in will county or buying a home in cook county, here is what you look for with property taxes in cook county and property taxes in will county….

What are the real property taxes for the last year? Don’t rely on what the MLS says for that. Vacant properties especially are notorious for inaccurate information on the MLS. Go to the property records. You can find on www.cookcountytreasurer.com or wwww.willcountytreasurer.com. You can use the PIN property identification number for the property or sometimes the address and find out what the real taxes are, what exemptions are on the house and what is the assessed value of the home.

Depending on the exemptions, if there is no homestead (homeowner) exemption, the property taxes in cook county and property taxes in will county should go down for the exemption, if you can file for the exemption within the first month or so of the year. If there is a senior, veteran or disability exemption and you do not qualify for that, the taxes will go up.

The same thing with the assessed value. The assessed value of the house determines the taxes. If the home is assessed lower than what you pay for it. The property taxes in will county and property taxes in cook county will go up. If you buy it for less than the assessed value, you have a chance to reduce the taxes by appealing the assessed value. Distressed properties (foreclosures and short sales) will usually not factor in the value appeal. You will have to formally file an appeal. CAUTION….this can only be done for a very short time each year. Will county property tax appeals typically allow 1 month where Cook County property tax appeals give 2-4 weeks. If you don’t file the appeal during that period, it will not be accepted. You need to watch the assessor’s websites at www.willcountyassessor.com and www.cookcountyassessor.com for dates, forms and requirements.

When you are buying a home in will county or buying a home in cook county, property taxes in will county and property taxes in cook county are factors in your decision. But keep one thing in mind. Very often, the reasons you may like the area are reasons that the same reason the taxes are high – good schools, good property values, not as much commercial or industry, etc. Keep that in mind. It may be a compromise that you are willing to make. Also, in some areas, the taxes are higher, but the prices may be lower, so often that can work in your favor to buy something at a lower rate.

Why are Property Taxes So High? Part 1 of 2

Spring is close to springing – hopefully – but as the excitement of Spring comes, the doom and gloom of taxes drags it down. Property taxes, income taxes, etc.

Despite the fact that our founding fathers rebelled against taxes from the British, ever since our government was formed the burden of the government (and the government’s spending) has been place squarely on the shoulders of property owners and taxpayers.

For some who recently received tax bills and some who will receive and pay them soon, this is a popular question. This blog will focus on the whys and next week, we will focus on how to change that, if possible.

Unfortunately, in the entire state of Illinois and in certain towns in particular, there are several reasons for high taxes.

1. SCHOOLS – Statewide, the government gives very little of the dollars collected to schools, so the burden is on the property taxes and that is a high burden. Depending on the area, between 60-80% of your taxes go to your grade school, high school and junior college.

This burden can increase on areas that have lower assessed homes get less tax dollars per home, so the district needs to increase the rate to get more tax dollars from each person. Or in some communities which have very few businesses and very little industry – they are called bedroom communities – and the burden or the tax coffers is on the homes and property owners with no one else contributing. Businesses and industry pay taxes (in cook county a lot more than homeowners) and do not send kids to school. That lowers taxes. Long and short is everyone pays more.

2. HOME RULE – Another reason for high taxes is that some towns in Illinois have “Home Rule.” Home Rule is allowed in Illinois for towns with over 25,000 population or by referendum. Many of these towns acquired this before it was apparent what could be done with it. Many south suburban towns have this authority. It allows the town to basically make the tax rate anything they want – no ceiling – no referendum for a vote. It gives the town government a blank check.

3. ASSESSMENTS – Perhaps your home is over-assessed. The home maybe overassessed due to no re-assessment when the property values dropped in the last few years. On your tax bill or on the county assessor’s website, you can see what the market value is on your home and what the assessment is.

4. EXEMPTIONS – Are you getting all of the exemptions you are entitled to? If you live in a home as an owner occupant, if you are a renter and are paying the taxes yourself as part of your lease agreement, if you are over 65, if you are over 65 and make less than a certain income, if you are a disabled veteran, disabled person, returning veteran or if you have just made a major value improvement to your home (exemption for a certain amount of time), you could be substantially reducing your property taxes with these exemptions. All counties are different with the amount and type of exemptions, but most counties at least do the homeowner and senior exemptions.

Taxes are very specific to the area. So if you are looking for a home, you need to weigh the taxes against other benefits like lower sales taxes, lower prices on homes, services provided by the town, better schools, etc.

Property taxes are easy to find. The MLS shows property taxes on each home, your Realtor can help with that. But always make sure you know the current taxes and exemptions on the home, which greatly affect the taxes. i.e. if it doesn’t have a homestead exemption it will be higher or if it does have senior exemption or other exemption and you are not qualified for that, it will be higher. You also can go on the county assessor’s website and search by address or property identification number (pin). Or you can call or go to the township or county assessor’s office and ask.

Echo Boomers Mark the Future for the Home Market

The big question many people are asking is about the future of the home market.  After the “bad years” or the bottom of the market experienced in 2008-2012, 2013 marked the up swing in pricing.  Many areas not riddled with distressed properties experienced an average of 10% price increases from 2012.  Low interest rates and increasing consumer economic confidence brought buyers into the market in 2013.  Inventory shortages drove prices up slightly and created some buyer challenges,but buyers bought homes in 2013.

2014 seems to be more of the same – so far.  Interest rates are still low and buyers are still in the market.  So, what does the future hold for the home market?  Sheer demographics can provide some of the answers.

80 million people were born in the US between 1982 and 1995.  They are called Echo Boomers or Millennials.  This is slightly larger in 4 fewer years than the 77 Billion born from 1946 to 1964 – otherwise known as the Baby Boomers.

Just as the baby boomers changed nearly every aspect of society with their large numbers at every stage in their lives, the larger masses of the echo boomers promise to make an equally big impact, including starting up the housing ladder, which has been in a stall for the past few years.

The oldest echo boomers are are 32 years old with the youngest at 19.  With many in this generation waiting until late 20’s to marry and have a family, these people are just starting to be secure in their careers and finances to buy homes.  By saving (living with parents), dual incomes and better salaries from mostly college and some graduate-level degrees, this generation has more money to spend right out of the gate.

They will buy first-time buyer and first- move up homes or larger, which allows the people with those homes to move up the home ladder to a larger home and/or in the case of the empty nesters and seniors, maybe move down to a maintenance-free home. This allows the housing market to progress.  When these buyers start their journey up the ladder, it allows everyone to continue up or down the ladder.

The next five years will bring the bulk of these buyers into the marketplace and will help prices increase and stablize.  So, the future of real estate is good, relying on the Millennials.

What is a SHORT SALE and Do I Care?

Good question.  I am asked this probably once a day from buyers.  Here are the basics…

 A short sale happens when the owner has a hardship of some kind that reduces their income and can no longer afford the payments.  They are losing the home, but the bank gives them an opportunity to sell it for less than they owe.  The bank will sometimes excuse the difference (deficiency) or sometimes they will reserve the price to collect it sometime in the future. 

 What a short sale means to a buyer is a couple of things – some good and some bad. 

 Time is NOT of the Essence.  Short sales are anything but short. When a short sale is put on the market, it may be occupied, it may not.  It may need work, it may not.  It may be functional, it may not.  But the one thing it will do is it will likely take between 3-6 months for you to close on a short sale.  It may take a month or more just to hear if you get are in competition for the home or even if you have a chance.  So, if you don’t have that kind of time or patience – move on.  There are a lot of foreclosure properties out there that will take 3 months or less to close with less uncertainty.

 Why does it take so long?  Anyone’s guess.  I have heard everything from lack of resources at the banks to the banks are waiting for a better deal. 

 There is a timeclock on these.  If it doesn’t get an offer once on the market 4-6 months under the short sale, the bank may just foreclose.  Then the property could be off the market for up to 2 years while in court.  There are some programs out there to reduce the time for short sale to 3 months with less notice wait, but make no mistake.  The bank is in complete control of what is going on here.   They decide what programs they will subscribe to, what they will take, etc.  The seller has no authority to make decisions.  They legally can sign the contract – that’s about it. 

 Good News.  The good news is that short sales are often deep discounted to sell.  So, they can offer a good deal on a home that could be fully functional and require less work…maybe… than a foreclosure.  Keep that in mind when making an offer.  Check with your Realtor to see what the value really is. Some banks start at market and then make cuts.  A low-ball offer will only add more time to your sentence with the bank and will usually not get you the house anyway. 

 Do I want a Short Sale?  Only you can decide if you want to look at short sales.  You can put in an offer and it may be accepted by the seller, subject to bank acceptance.  But the bank can take any other offer at any other time for any reason – not just price, could also be type of financing, etc.  Price is usually king though.  It is completely up to them.  Again, unless you are not in a crunch and do not have patience, you may want to look at other properties first.  BUT… if you have the time and patience, you can wait it out and maybe get a good deal.  And you can – and should – keep looking for homes.  Something else can come up and until the bank accepts your offer, you can always withdraw your offer with no penalties. 

 What Can I Do?  There are some things that may improve your chances, but keep in mind, every bank is different.  First for sure use a professional – and in my opinion – not the listing agent.  The listing agent can represent the seller and buyer, in the state ofIllinois (among very few) but where is their loyalty?  To the seller.  It is a briar patch for the agent, the buyer and the seller.  Get your own advocate and your own representation.  And make sure you use someone who has some knowledge or experience with short sales.  There are certain questions about the bank, the loan(s), the owner and the process that can give an experienced or even a knowledgeable broker some indication of what the timetable could be like. 

 How you put in your offer and how sure your offer is to a banker can also affect your delay and your acceptance.  The least contingencies (mortgage and inspection), the closest to list price, the most earnest money, the firmest bank approval of the loan (not just a preapproval is better), the more money down you are putting on the home help.  In the bank’s inbox of offers, the path of least resistance and most likehood to succeed will be pulled off the pile first. 

For more information on short sales, contact RE Marketing Consultants at 888-788-9544 or suzanne@remarketingconsultants.com  and find out if short sales are good for you.   If it works for you – it could be a great opportunity.