About Short Sales

Short-sales are a big part of today's market. More than ever consumers need the assistance of a professional to navigate the dangers of buying and selling a short-sale.

A Tale of Two Short Sales

It was the best of times; it was the worst of times ...

In many parts of the country the economy is stalled. One indication of this is the many short-sales and foreclosures on the market. But that means opportunity for savvy buyers. This is a tale of two buyers, Amy and Edwin. Both are buyers. Both have short-sales under contract. Both have been waiting months to go forward.

It was the age of wisdom; it was the age of foolishness ...

Short-sales often advertise ridiculously low prices. In Northern Virginia, it's not difficult to find short-sales selling for $10,000, $20,000 even $50,000 or more less than than comparable homes available for sale. This is the time of bargains, and lenders in up-side down loans are hurting. But that doesn't mean they're giving away free money in America.

It was the epoch of incredulity; it was the season of light ...

Here's a tip from one who knows: when you find a home for sale for much less than all of the comparables you probably have not found a bargain; you've probably found a waste of time. Oh sure, you should check it out, but don't get your hopes too high. Ask your realtor for the inside story. If he or she tells you to walk away ... walk away.

It was the season of darkness, it was the spring of hope ...

Short sales are not. (Short.) Homes that sell for far less than any comparable homes don't. (Sell.) Now is a great time to buy. But now more than ever, buyers need experienced realtors who will get a home ... not a contract and a hope.

it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way--in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.

Amy and Edwin both put in contracts for short sales. Amy is closing today on the home of her dreams. She paid more than the asking price and less than the market value. Months later, Edwin is still waiting for a decision. He has contracted at a price much lower than the assessed value. But that does not a bit of good if the bank will not sell the home. Maybe Edwin will one day buy the home of his dreams.

He lowered the window, and looked out at the rising sun. There was a ridge of ploughed land, with a plough upon it where it had been left last night when the horses were unyoked; beyond, a quiet coppice-wood, in which many leaves of burning red and golden yellow still remained upon the trees. Though the earth was cold and wet, the sky was clear, and the sun rose bright, placid, and beautiful.

Sponsored by Condo 1 Alexandria / Will Nesbitt Realty LLC

Serving real estate needs of Northern VA · in Alexandria · in Arlington · in Fairfax County ·

Buying bank owned homes in a nutshell

Sponsored by Condo 1 Alexandria / Will Nesbitt Realty LLC

Serving real estate needs of Northern VA · in Alexandria · in Arlington · in Fairfax County ·

Tips for buying a short-sale

Knowing the problems of short-sales, I have developed a strategy to avoid some of the worst of the pitfalls.

If you're in a hurry don't even consider a short-sale. Short-sales work best for investors who have no emotional attachment to a property. Short-sales work well for investors who won't need to live in the home. Short-sales don't work well for home-buyers who are on a schedule.

If there are multiple offers on a property, walk away. If you make an offer on a property with multiple offers there are only two possible outcomes:

You waste your time pumping up the price for someone else;
You paid more than anyone else. If you paid more than anyone else, you didn't get a bargain. If you paid retail for a short-sale, you paid too much.

Find out if there are multiple offers or worse yet contracts before you even look at the property. It's maddening and I wish the associations would do something but too many properties that are listed as "active" aren't really active. There is no sense looking at something that isn't for sale.

Walk away from unethical, unprofessional agents, as these are the agents who are most likely to sanction last minute contract adjustments that cost you money. Here are some clues you'll find in the listing that might indicate that the agent is unethical or ignorant:

The remarks contain very basic English spelling and grammatical errors.
The remarks solicit a specific title company. Agents and brokers don't make money off title companies. It's against the law for us to make money from title companies. It is inappropriate for us to solicit a particular title company.
The remarks talk about agent commission. It is inappropriate for an agent to talk to the general public about what we make. I could care less if you know what I make, but if an agent puts commission notes in the remarks the agent clearly is ignorant or unethical.
As a member of the buying public you cannot see the commission, but your agent can see what the stated commission is. If the commission is listed as 50% or 50/50, then you're probably headed for trouble. MLS rules require that the seller state his commission when offering the property for sale. An agent who sanctions flexible terms is an agent who believes in the idea of flexible contracts. The very reason for a contract is to establish the terms: not to leave the terms open so that one party can change them at the last minute.

What can we do as agents? I now report every bogus listing to Compliance. Every single property listed as active that is not active, I send to MRIS. Every single title solicitation: I report to compliance. Every flexible commission I report to Compliance.

It's a royal pain to complain and report, but I take the time to do this because I take serious my duty to the public. I really wish an authority figure would take the time to clean-up the mess, but until then I will do the best I can with what I am given.

Will Nesbitt is the Principal Broker of Condo 1 Alexandria and serves home buyers, sellers and landlords throughout Northern Virginia.

Sponsored by Condo 1 Alexandria / Will Nesbitt Realty LLC

Serving real estate needs of Northern VA · in Alexandria · in Arlington · in Fairfax County ·

Pitfalls of a short sale

Here are some of the many pitfalls of a short-sale.

Time to close

Short-sales take a long time to close. Although lenders are getting better in short-sales, they are notorious for making slow decisions when negotiating. I had a client last year who agreed to pay cash and purchase a short-sale in 3 days. The seller accepted the offer but the lender took 4 months to agree to the offer. When buying a short sale, you have to act quickly. After you act quickly, you often have to wait a long time.

Multiple offers

Short-sales often involve competitive buying. That is to say, there are multiple offers on the property. Despite what you may have heard about this being a buyers' market, there are ALWAYS buyers who are interested in something for nothing. In addition the Northern Virginia economy has not been impacted the way places like Detroit affected by the recent economic news. In Alexandria, in Arlington and anywhere near the metro, there are many folks who want to buy homes. Homes that are nicely priced, in good condition and in good locations are selling quickly.

The property isn't available

Fully two-thirds (maybe more) of the short-sales listed for sale right now ... ARE NOT AVAILABLE. This is perhaps the most maddening part of short-sales as a considerable portion of my day is spent sorting through properties that are listed as ACTIVE in the MLS but they are in fact not on the market. Why are these properties listed for sale when they are active?

The simple and sad answer is that many agents who are selling short-sale properties don't understand there aren't any special rules for short-sales. If a property is offered for sale, the agent has a duty to the public in addition to his/her duty to his client. His duty to the public and Fair Housing Laws require that he promptly present any offers to purchase to his client. If the client agrees to the offer, but the caveat that the contract must be approved by the lender, that contract should be listed in the MLS as under contract with a kick-out. Most agents these days leave the property as active, wasting the time of buyers and agents everywhere.

Often, a selling agent continues to list the property as active because it is not uncommon for a short-sale buyer to back-out after the purchaser finds out just how much hell they'll have to suffer to get a bargain. The selling agent might not be aware that listing this property as active in the MLS is unethical, but the selling agent certainly does not care if you waste your time trying to buy a property that has already sold.

The unethical selling agent wants to continue to market the property even though the property is under contract. This way the selling agent can get a couple of back-up offers in case the first contract blows up.

The stick-up

The last and worst part of a short-sale is what I've come to call "the stick-up". The "hold-up" occurs when the seller changes the terms of the deal at the final hour. I'll call it a "stick-up" or "hold-up" because I find this selling tactic contemptible, unethical and a form of stealing. There are no guns involved, but the net effect of the change is not much different from a stick-up or a hold-up.

The stick-up occurs come after the buyer has invested a lot of time and effort negotiating the deal. The change is simple: when you get to the final hour, the buyer finds out that the property costs more than what agreed upon. These changes come after the buyer has invested money in inspections and appraisals. These changes come after the buyer has given notice that he/she is moving or after the buyer has sold his existing home.

Not long ago, I was only the phone with an agent who was clearly very experienced selling short sales. The terms of the deal changed at the final hour to require an additional sum of money from the buyer: a sum of the buyer simply did not have. When I asked her by what rights she thought the deal could be changed, she told me with a straight-face: "This is a short sale. Short sales are different."

She informed me that she had sent me an email saying the price had changed after the deal was done. I told her that she could send me all the emails she wanted, that doesn't give you the power to change a signed contract. She seemed truly baffled about my stance.

The contract stated that the contract had to be approved by the lender. And, the lender had approved the contract. But now, the lender had changed their approval. This agent, well-experience with selling short-sales, thought that was standard practice, and she thought the bank was acting in good faith.

We ended up with a happy ending for the buyer, but there was a lot of drama and tears and fighting before it closed. I still get a knot in my stomach when I think back at that one.

About the Author --- Will Nesbitt is the principal broker of Will Nesbitt Realty and maintains Condo 1 Alexandria. Will specializes in condos, townhouses and single family residences in Alexandria, Arlington, Fairfax County, Crystal City, and Kingstowne. Will resides in Belle Haven Estates just outside Alexandria VA in Fairfax County.

Sponsored by Condo 1 Alexandria / Will Nesbitt Realty LLC

Serving real estate needs of Northern VA · in Alexandria · in Arlington · in Fairfax County ·

What is a short-sale?

A short-sale occurs when the individual selling the property is selling the property for less than what they owe for the property. This means that after the seller agrees to the price, the lender must also agree to the price. Despite what anyone might try to tell you, that's the only difference between a short-sale and a normal sale.

Unfortunately, there are many selling agents who work with the notion that there is a different set of rules for short-sales. These misguided agents are souring the market for everyone. (See Pitfalls of a Short Sale for more information.)

In Northern Virginia, below a certain price-point nearly half of the properties for sale are short-sales. In some neighborhoods, more than a third of the properties for sale are short-sales. So, short-sales are almost unavoidable. If you are considering purchasing a short-sale, you should learn more about the pitfalls and drama associated with short-sales and deal with an agent who has experience sorting through these complicated matters. Check here for tips for buying a short-sale.

Sponsored by Condo 1 Alexandria / Will Nesbitt Realty LLC

Serving real estate needs of Northern VA · in Alexandria · in Arlington · in Fairfax County ·

Latest foreclosures and short-sales

$479,900 :: 6111 Mulberry Ct, Alexandria VA, 22310

Click picture or title for more information

4 beds, 3 baths
Home size: 3,150 sq ft
Lot Size: 13,137 sq ft
Added: 03/10/10, Last Updated: 03/11/10
Property Type: Residential for Sale, Detached for Sale
MLS Number: FX7277482
Tract: Wilton Forest

Super opportunity to live in the coveted neighborhood of Wilton Forest. Fabulous brick rambler with full finished basement. Huge kitchen with table space and granite. Two fireplaces, deck, patio and fenced yard in a very private setting. Less than 2 miles to Huntington metro. Buyer to pay $750 of neg. fee. Looking for quick contract, professionally negotiated for quick sale. Act fast!

Listed with Prudential Carruthers REALTORS