Hi Wendy,
I'm a First Time Homebuyer in Niceville Florida (or rather am seeking to become one) and my wife and I found a house that is a short sale.
I've been researching the ins and out of buying a short sale but there are of course more questions then answers :) The information I was given was a BPO of 290K, the home is listed at 230K, with an offer of 200K. This information was given freely by the listing agent.
The home is beautiful but it has since been vacated. No utilities, the home has since been broken into and vandalized, the refrigerator is tainted with an unholy smell and must be replaced, and the owner left a ton of debris behind when he/she moved out. Is this common in a short sale? Is this really a foreclosure? From what I have been reading it seems like people continue to occupy their homes during a short sale, not abandon them to disrepair during the process.
I would be most thankful for any opinions or advice you could offer. From what I have read it is essential to obtain a buyers agent in a short sale, one with experience, so that will be the next thing I research (I saw the property yesterday), correct? Cynthia
Dear Cynthia,
1. If a BPO (Broker Price Opinion) on file with a bank is significantly higher than the offer or list price, you've got a problem. However, if the BPO is more than 90 days old, most lenders will order a new one. Home prices are dropping in Niceville, so that would be a consideration. Additionally, your agent might be able to provide her own market analysis of the property for the listing agent to submit to the lender, that might help them better understand the current market conditions and pricing scenario.
2. You may be in an auction situation, as you wrote there is already is "an offer of 200k". That may mean the property is under contract, with an offer accepted by the homeowner, but yet to be approved by the short sale lender. If the listing agent indicated she would be sending multiple offers to the short sale lender, that diminishes your chance of procuring the property. Additionally, the Florida Association of Realtors legal advisors have stated that secondary offers must include an addendum stating they are "back-up" offers only.
3. It is common for short sales to be vacant with no utilities. Why? Because the property may be a rental, and the owner was unable to find a tenant. Or the owner may have been transferred. The utilities are off because most sellers doing a short sale do not have the financial means to pay for utilities. You should still have a home inspection, although most short sales are sold "as is". You should have the right to cancel your contract if the inspection is unacceptable. Understand that you may have to pay a small fee for the water, electricity, etc to be turned on in order to facilitate your home inspection.
4. A "short sale" is not a "foreclosure". A short sale is still owned by the homeowner. A foreclosure is owned by the homeowner's mortgage lender. The definition of a "short sale" is when the lender agrees to a accept a payoff for less than the remaining mortgage balance, and possibly forgive the entire shortfall, as well as pay the seller's closing costs including the Realtor fee. The loss is either completely written off by the lender, a payment arrangement is made with the homeowner (promissory note), or a lump-sum for a potentially lesser amount is agreed to (cash contribution).
5. YES, it is essential to hire an experienced buyer agent in pursuit of your Niceville Florida home. A short sale is a complex transaction, and a good buyer's agent will help you structure your offer to your best advantage, and in such a way that might also fit the criteria of the short sale lender.
It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Search Niceville FL real estate
Short Sale Pre Foreclosure Help.
Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204
Email itswendy@rulnickrealty.com
Wendy Rulnick specializes in real estate sales, short sales, traditional sales on Emerald Coast of Florida: Destin Florida real estate, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field. Wendy Rulnick, Broker and Realtor, has been selling real estate for 20 years. She has won numerous awards, including the coveted ADDY for advertising design. She is ranked in the top ½ percent of all Realtors on the Emerald Coast of Florida for resale listings sold and was featured in Kiplinger Personal Finance Magazine as a short sale specialist.
All Rights Reserved. "Question from Niceville Florida Short Sale Buyer" Contact Wendy Rulnick regarding Destin Florida real estate and vicinity. Copyright © 2009 by Wendy Rulnick.
This site, Wendy Rulnick or Rulnick Realty, Inc. is not providing legal or tax advice. The information provided is for educational and informational purposes only. It is recommended that sellers considering a short sale should consult an independent legal and tax advisor for more information.
The best part of my day trumped any real estate sale I could ever make. I was chatting a friend, whom I'll call Jessica, in Fort Walton Beach Florida, when her cell phone rang. Jessica is a small business owner on the Emerald Coast, and I have bought her products for many years. Whenever I see her we talk about our lives and our businesses - one entrepreneur to another. Anyway, her phone rang and she looked at it, checking the caller id. "I am not answering that! It's a bill collector", she told me. Jessica proceeded to describe how her company's profits had dwindled in the past year, so that now her income was reduced to one-third of what it was. "People put off buying my product, they want until they absolutely have to or just stop altogether," she said. Jessica told me she had been getting behind in her credit card bills, and her mother had to pay her last three months mortgage payments. When creditors called, she would start into her sad story, "I am a single mother" and hope for any reprieve. She did not know how she was going to be able to make it. "I don't want to lose my house!" she admitted.
I advised Jessica to take immediate action and first call her mortgage lenders. They might be able to help with one of the following steps:
Next, I told her to go online to Consumer Credit Counseling Service or the National Foundation for Credit Counseling. Groups like CCCS help people with debt management. They may be able to arrange a plan with creditors to lower monthly payments and save a dire financial spiral. Organizations that work with consumers to manage debt usually charge a small monthly fee, but only if there is capacity to pay. Suze Orman, the well-known financial guru, endorses such programs for those in need. The Consumer Credit Counseling Service of West Florida can be reached directly at (850) 314-9888 and is located at 913 N. Beal Pkwy, Ste H, Fort Walton Beach, FL 32547.
"Don't delay!" I told Jessica, "Take action right away. If you take these steps now, you may be able to save your home and your credit." She thanked me profusely, and said she had not known there was help available, and she would immediately call her lenders and the consumer credit counselors. If you are in a similar situation, don't deny it or wait to take action. If you wait, it might be too late to save your home, your credit and your well-being.
It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Search Fort Walton Beach Florida real estate
Short Sale Pre Foreclosure Help.
Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204
Email itswendy@rulnickrealty.com
Wendy Rulnick specializes in real estate sales, short sales, traditional sales on Emerald Coast of Florida: Destin Florida real estate, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Crestview, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field. Wendy Rulnick, Broker and Realtor, has been selling real estate for 20 years. She has won numerous awards, including the coveted ADDY for advertising design. Wendy is in the top ½ percent resale agents on the Emerald Coast, and was featured in Kiplinger Personal Finance Magazine as a short sale specialist.
Rights Reserved. *Fort Walton Beach Homeowners: Help To Save Home and Credit"* Contact Wendy Rulnick regarding Fort Walton Beach Florida real estate and vicinity. Copyright © 2009 by Wendy Rulnick. This site, Wendy Rulnick or Rulnick Realty, Inc. is not providing legal or tax advice. The information provided is for educational and informational purposes only. It is recommended that sellers considering a short sale should consult an independent legal and tax advisor for more information.
Wendy,
I have read quite a bit of your articles regarding Destin real estate and area short sales. I have made an offer to buy a short sale in October and we are still waiting. The house is brand new, it's listed for $799,000. The builder owes over $700,000. The house is not finished, it needs countertops, appliances, driveway, painting, finish hardwood floors, etc. Approximately $100,000 is necessary to complete house. A home 2 doors down just sold for $540,000. This new house is the nicest house in the development but definitely not worth $800,000. In our opinion even though it is the nicest house it probably is still not worth more than $600,000 to $650,000 that's if it was completed.
I originally offered $500,000 but now want to reduce my offer to $450,000 since it needs $100,000 to fix up and in our Destin real estate prices are still falling. The negotiator is assigned and they will do an appraisal or BPO within 30 days. I feel $450,000 is fair given the changing market. Do you know typically how much Countrywide will go below market value, especially on an unfinished house?
Thanks,
Joe
Hi Joe,
Countrywide will not "really" go much below market value. They will rely heavily on the Broker Price Opinion (BPO) or appraisal, as I wrote in 'Short Sale Pricing: The "X Factor"' and will want close to that figure. Their calculations will depend on who the end-investor is on the loan, and those specific requirements. For example, if the loan has mortgage insurance (MI), they might want the "Net Proceeds" to be 91% of appraised value sometimes! One thing you cannot control is the BPO or appraisal, but you can inform the party doing the appraisal of cost estimates to finish the house. That may help keep the end figure realistic.
If you reduce your offer now, Countrywide might close the file. That will depend on the negotiator. Sometimes Countrywide relies on a valuation they have in their system already, and if the offer is below it, they will just cancel the file. Then you will have to start all over, and again risk the file being cancelled because you are too low.
Your concerns make sense and are valid. If you think you are overpaying for a property, I'd use caution. Best of luck.
Wendy Rulnick
Broker, CRP, CRS, GRI, ABR
Rulnick Realty, Inc.
Toll Free 877-487-9639
Local 850-650-7883 ext 204
Short Sale Pre Foreclosure Help.
Email itswendy@rulnickrealty.com
Wendy Rulnick specializes in real estate sales, short sales, traditional sales on Emerald Coast of Florida: Destin Florida real estate, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field. Wendy Rulnick, Broker and Realtor, has been selling real estate for 20 years. She has won numerous awards, including the coveted ADDY for advertising design. She is ranked in the top ½ percent of all Realtors on the Emerald Coast of Florida for listings sold and was featured in Kiplinger Personal Finance Magazine as a short sale specialist.
All Rights Reserved. *Q&A From Destin Short Sale Buyer* Contact Wendy Rulnick regarding Destin Florida real estate and vicinity. Copyright © 2009 by Wendy Rulnick.
This site, Wendy Rulnick or Rulnick Realty, Inc. is not providing legal or tax advice. The information provided is for educational and informational purposes only. It is recommended that sellers considering a short sale should consult an independent legal and tax advisor for more information.
A disturbing trend is emerging in the Short Sale world. In the last two months, I have had locks mysteriously changed and signs removed on two of my Short Sale listings, one in Gulf Breeze Florida, and the other in Santa Rosa Beach Florida. In both cases, I had lockboxes on the properties. The houses were vacant, with sellers out-of-state. I am certain the mortgage lenders performed the lock changes. In instances where properties may be considered abandoned, the lender may secure the property. The bank's rights are commonly stated with language as follows, from a standard Freddie Mac mortgage:
9. Protection of Lender's Interest in the Property and Rights Under this Security Instrument. If .... Borrower has abandoned the Property, then Lender may do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property and rights under this Security Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing the Property...... Securing the Property includes, but is not limited to, entering the Property to make repairs, change locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or dangerous conditions, and have utilities turned on or off. Although Lender may take action under this Section 9, Lender does not have to do so and is not under any duty or obligation to do so. It is agreed that Lender incurs no liability for not taking any or all actions authorized under this Section 9.
In the case of the Santa Rosa Beach property, I had an ACTIVE OFFER working with the lender, Saxon Mortgage. Apparently, the banks' property preservation departments got a little overzealous, and didn't bother to call my LARGE telephone number on the SIGN in the front yard. In two other instances, I have had the property preservation companies call me first, and ASK if they could change the locks. When I told them I had the house actively on the market, they backed off. But obviously, this is not always going to be the case. Each lockbox I purchase is $90. My signs are $70. They now have been stolen. Every time this happens, my choices are:
1. Change the locks back at a cost of $100.00, and install another $90 lockbox - for potential loss of $190 (in addition to the $160 in property I've already had stolen)
2. Re-install another $70 sign, and risk that, too, being stolen
3.Try to track down the property preservation company by going through endless loops at each bank, and somehow recouping my property and regaining access
4. Removing the listings from the market
In conclusion, Short Sales, touted as the top alternative to foreclosure by the lenders themselves, are being physically prevented BY the lenders themselves.
It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Search Destin Florida real estate
Short Sale Pre Foreclosure Help.
Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204
Email itswendy@rulnickrealty.com
Wendy Rulnick specializes in real estate sales, short sales, traditional sales on Emerald Coast of Florida: Destin Florida real estate, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Crestview, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field. Wendy Rulnick, Broker and Realtor, has been selling real estate for 20 years. She has won numerous awards, including the coveted ADDY for advertising design. Wendy is in the top ½ percent resale agents on the Emerald Coast, and was featured in Kiplinger Personal Finance Magazine as a short sale specialist.
All Rights Reserved. *SHORT SALES: Banks WILL Change Your Locks Prior To Foreclosure"* Contact Wendy Rulnick regarding Destin Florida real estate and vicinity. Copyright © 2009 by Wendy Rulnick.This site, Wendy Rulnick or Rulnick Realty, Inc. is not providing legal or tax advice. The information provided is for educational and informational purposes only. It is recommended that sellers considering a short sale should consult an independent legal and tax advisor for more information.
BB&T Corporation has approved one of my listings for a short sale in Santa Rosa Beach Florida. From my experience, it was a very smooth and expedient transaction. Details:
Hardship: Homeowners in sales - decreased income, medical expenses
Property: Santa Rosa Beach cottage style home, built in 2004, 1900 square feet
Lender: BB&T - 80-20 First and second
Mortgage Balance: $370,000
Offer: $175,000 (fair market value)
Seller Contribution: $20,000 promissory note
Debt Forgiven: $175,000
Approval Time: 35 days from fax to finish
It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Short Sale Pre Foreclosure Help.
Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204
Email itswendy@rulnickrealty.com
Wendy Rulnick specializes in real estate sales, short sales, traditional sales on Emerald Coast of Florida: estin Florida real estate, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field. Wendy Rulnick, Broker and Realtor, has been selling real estate for 20 years. She has won numerous awards, including the coveted ADDY for advertising design. Wendy lists and sells homes, condos and townhomes in Destin FL and the surrounding areas. She is ranked in the top ½ percent of all Realtors on the Emerald Coast of Florida for resale listings sold and was featured in Kiplinger Personal Finance Magazine as a short sale specialist.
All Rights Reserved. *BB&T APPROVES SHORT SALE* Contact Wendy Rulnick regarding Destin Florida real estate and vicinity. Copyright © 2009 by Wendy Rulnick.
This site, Wendy Rulnick or Rulnick Realty, Inc. is not providing legal or tax advice. The information provided is for educational and informational purposes only. It is recommended that sellers considering a short sale should consult an independent legal and tax advisor for more information.
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Destin short sales, real estate, homes for sale, condos on the Emerald Coast of Florida- Destin, Sandestin, Fort Walton Beach, Santa Rosa Beach, Seagrove Beach Navarre, Niceville.
