Here are brief descriptions of two different kinds of real estate sales we deal in daily
(Description)
Short Sale is a traditional sale in which the owner of the home is still the decision making party for entering into a contract with a perspective buyer. The sale however is bound to the lender(s) agreement with the terms contained within. Typically a short sale is performed when the seller is upside down on the property (owing more than it’s value) or perhaps has lost the ability to make payments due to a hardship(s).
REO (Real Estate Owned) are typically properties that have gone through the foreclosure process and have reverted back to the Lender / Bank.
(Disclosures)
Short Sale – If the owner has lived in the home mandated disclosures should be available to the buyer.
REO – Most mandated disclosures for a typical sale are not required. The reason is the Lender / Bank usually do not have any personal knowledge of the condition or prior use of property.
(SOLD AS IS)
Important point…”As Is” means pretty much the way it sounds. Simply stated you are buying the home as is, where is, with all faults.
(FORMS)
Forms used for the sale of these types of property may vary greatly.
Short Sale – If you are using a Realtor, you most likely will be using forms made up and used by the California Association of Realtors.
When purchasing an REO, a majority of the time the buyer will find themselves required to sign and agree to Addendums written for the Lender / Bank by their perspective legal advisors. These forms may contain terms, conditions and time frames that vary greatly from what is found within CAR forms…Should these addendum(s) be confusing to you, it is advised to have legal representation of your choosing look them over and explain the impact they may have on the sale of the property.
(INSPECTIONS)
Both types of sales allow buyers to perform home inspections…However, typically REO addendums limit the time to shorter periods to have the inspections performed. Many addendums include a clause where the buyer forfeits their right to cancel the contract due to items found during an inspection if the time period specified for inspections has passed.
(REPAIRS)
Unfortunately due to the situation of sales both represent, the sellers may be reluctant or financially unable to perform items found during an inspection. Most Lenders / Banks performed repairs they were willing to accomplish before the property is listed for sale. Again “AS IS”.
(Time Period for acceptance)
With the large amount of REO and Short Sales presently on the market, this is the biggest difference. REOs will usually get an answer back to a perspective buyer in a quicker time frame. However Addendums may contain wording stating an offer is not a contract until all parties have signed. If a higher net offer comes in before you have a contract signed by the Lender/Bank, they still have the right to accept the higher offer. Many times acceptance/ start dates on an REO Addendum will reflect they begin before you have a signed contract by the Bank/Lender. This is another reason discussion with legal council of your choosing is advised.
Short Sales – Unfortunately the time frames to receive an answer with short sales can take a few weeks to extreme cases of a year, each depending upon the Lender(s) / Bank(s). It is advised to be patient. It is advised not to schedule a move until such time as your transaction is in escrow with all Lender/Bank approvals being in hand for the sale.
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(951) 545 5735
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| Upside down in your market value and need to sell but are not sure what to do? ..Let me set you up with a Short Sale Specialist. | |||
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