Charlotte Real Estate Blog

As an agent you hear of horror stories about short sales and how much of a pain they can be.  I have closed several short sales but only recently have I understood what some of the agents were complaining about.  Some banks will approve the list price of a short sale.  When the bank approves the list price it is a much smoother transaction and the process does not take as long.  If the bank does not approve your list price then it can be frustrating.

Why would the bank approve a list price?

• They would order a BPO (broker price opinion) early so that they know the market value of the property and this will attract buyers knowing that the price is approved and the process will not take months after they submit an offer.  Some short sale buyers don't want to wait around for months while the bank is making its' decision.

Why wouldn't the bank approve the list price?

• It is possible that the short sale is on the market for several months and the market value will change so many banks don't want to order a BPO (broker price opinion) or start the short sale process until they have an offer.
• If they approve a list price then they have pretty much set a cap on the amount that will be offered and they will more than likely receive low ball offers.  It is not uncommon for the buyer to offer more than the list price if the price has not been approved by the bank. 
• The unapproved list price will probably be lower than if they approved a list price and this will spark more buyer activity and hopefully they will get multiple offers...this turns into a bidding war until they get the offer at or near market value.

If the bank decides not to approve a list price then they pretty much don't want to talk to the listing agent until there is an offer on the table.  At this time the bank will ask to see the offer, a preliminary HUD1 (this is your settlement statement that you receive from the attorney at closing), they want a hardship letter explaining why the sellers are unable to continue paying their mortgage, financial statements and two years of tax returns. 

Be prepared to pull your bank statements, income statements and a list of your monthly expenses multiple times during the process.  The process will probably take several months and the banks are going to ask for updated information throughout the sale.

Once the bank has an offer, the seller's financial information and the market value of the property then they will begin to negotiate with the buyers.    There are a lot of buyers that only want to look at short sales so you need to know what you are doing before diving in to the action.

More information on the short sale process.

Are you ready to start looking at houses in Charlotte?

Before you start your search you should know at least a little about the process.

Your first step should be to talk to someone about a mortgage.  They will be pull your credit score, check your income and will then be able to tell you how much house you can afford.  The lender should also be able to show you a good faith estimate.  This will show your expected interest rate (this will not be set until you go under contract on a house and decide to "lock in" in your interest rate) and the expected monthly payment. 

Now that you know that you can get a mortgage you should begin looking for the right house.  The market is still saturated with listings.  A lot of the inventory from $200,000 and below has been bought by first time home buyers over the last couple months but there is still a lot available and there are a lot of great deals in this price range and higher. 

You should decide to work with a real estate agent that is familiar with the area that you want to buy.  A buyer's agent is free to you and will be paid by the seller.  The sellers have a listing agreement with the listing agent and it states that they will be paying a certain percentage once the house closes.  The seller is going to be paying the commissions so you might as well get an agent that will help you look at property and that will guide you through the process.  The buyer's agent will be able to set appointments and will be able to open houses for you to view, they should also be able to tell you about the current market in that subdivision as different subdivisions have been effected differently by the economic downturn. 

Once you do find the house you want, the agent will be able to complete the offer for you, they will negotiate the price on your behalf, set up inspections, negotiate repairs and get all of the information to the appropriate closing attorney. 

Buyer's can find a lot of the information online.  They can see the properties that are for sale and can also look up the previous sale prices for that property.  What the majority of buyers do not know is the reputation of that certain subdivision, the future development that will be taking place in the area over the next few years and other pertinent information such as the closest waste plant, the closest shopping and the school districts.

If you are going through the buying process or are considering buying and have some questions feel free to give me a call.