Acquiring a Short Sale Home in Arizona has become much more permissive over the years, though not every short sale is the same. There are many components involved in a short sale, and the more details you have, the more authentic your experience will be. Here are the top 7 queries you should consider when buying a short sale home in Arizona.
1. How many lines of credit are connected to the short sale, and which banks are servicing the loan(s)?
A short sale that involves multiple loans with different banks can be far more difficult and take significantly longer than a short sale with only one line of credit or 2 lines of credit with the same financial institution. Typically a extension of credit in a subordinate position may only get a few thousand dollars from the sale, considering it will be annihilated at foreclosure and would receive nothing. Even so, non-primary loans can still demand more and can even take it to foreclosure if not receiving the requested amount. It can be even more arduous if the non-primary is a HELOC-a extension of credit which involves withdrawing cash out against the equity in the house. Often, this type of loan demands a minimum of 10% which the primary loan holder may or may not agree to.
2. Are there any other claims on the property affected?
If there are any Homeowner Association claims on the property, contractor claims on the property, IRS holds on the property etc. this may prolong and make the short sale procedure difficult or even impossible. The majority of the time banks will not provide for these liens, and the seller may not be able to or unwilling to cover these costs. Often, the seller will ask YOU, the buyer, to absorb these costs.
3. Does the Seller have a genuine hardship?
Banks will want proof that the seller has a real hardship, which may include loss of employment, reduced income, increased debt, medical issues etc. Sellers without hardships are many times asked to contribute to the sale with an upfront payment or a promissory note. In some of these cases, sellers will choose foreclosure (which voids the short sale) as it is more convenient to them.
4. Who is arbitrating for the short sale?
If the listing agent is the one arbitrating for a short sale, you can request information about their experience and favorable vs. not so favorable outcomes in negotiating short sales. Sometimes it is an Attorney or third party company bargaining-which you can also look into their exposure to / success. A proactive and experienced negotiator will really maximize the successfulness of the short sale.
5. What state is the home in?
About all short sales are sold AS-IS, expressing that the seller is not offering any warranties on the home and most likely won’t do any repairs. If you are establishing FHA or conventional financing, there may be improvements that are must haves to obtain your line of credit. Since the chances of the seller furnishing them is not probable, the accountability would fall to you.
6. What are the Comparables on the property?
A lot of listed short sales are not approved at the list price, and must get approval from the bank. The bank will either order an appraisal or a BPO (Broker Price Opinion) to get an assessment of the home. If the assessment comes in above the offered price, the bank will typically counter your offer. Evaluating the last 3 months active, pending, and sold houses should give you an understanding if the price is in line with market value.
7. What is your timeline for closing?
If you are seeking a speedy close, purchasing a short sale home in Arizona may not be a good fit. The average timeline of a short sale is 60-90 days, though it could be much faster or much slower depending on the factors above.
Short sales will continue to be a considerable part of the market here in AZ for a long time. Buying a Short Sale Home in AZ can be a desirable way to get an excellent home or investment property at an excellent price.
I have personally been negotiating short sale homes for nearly 5 years, and can say they have become much easier to deal with-though not always! I have helped lots of buyers purchase short sale homes throughout the years, and will behappy to answer any of your questions. For a no-obligation consultation, please contact me by clicking here www.ScottsdaleRealEstateNow.com