There's Nothing Short About a Short Sale

Most people have heard the term "short sale" in the news.  It's often talked about in conjunction with "distressed properties" and foreclosures.  But I often encounter buyer's who don't know exactly what a short sale is or how it works or how it differs from foreclosed properties.

So here's a simple explanation and then some things to consider about short sales...

A short sale refers to a home where the owner is upside down in their mortgage.  In other words, they owe more than it's worth.  So they are basically asking permission from their lender to sell the property for less than what's owed.  It means the bank takes a loss.

Sometimes banks will forgive the difference or "shortage" and other times they will require the home owner to sign a promissory note for the difference.  So if you are selling, it's best to consult an attorney and other professionals to provide you with accurate information and protect your interests.

Keep in mind though that a short sale does NOT mean that they will necessarily sell the house for less than it's worth.  Most banks will insist that the home owner (with the assistance of a real estate agent) try to get what ever is fair market value for the home at the time.  Over time, they may agree to price reductions until an offer is produced, but the bank can counter-offer back to the buyer for more.

Basically, there is nothing "short" about a short sale.  The time frame for closing on one of these properties has improved as the banks have gotten better at handling them.  However, there are never any guarantees.  Here in the Charleston, SC area a "normal" sale can take 30-45 days from the time you go under contract to the time you sit at the closing table.  However, with a short sale, it can takes weeks or even months to just get an initial response from the bank.  They may accept, reject or counter the offer.  So a short sale may not be the best option for someone who has a specific time frame for moving into a new home.

A foreclosure on the other hand is a property that the bank has already taken possession of.  The homeowner is already out of the picture and it is bank owned.  These properties can usually close in a more "normal" time frame of 30-45 days.  And here is where you can sometimes get a real deal because the banks want to get rid of these properties.

One thing in common between foreclosures and short sales is that the bank is already taking a loss on these properties.  Therefore, most of these homes are sold "as is".  When buying, I strongly recommend that you insist on making any home purchase contingent on the buyer's approval of a home inspection, but especially in a case where the home is being sold "as is".  This way if there is just too much wrong, too many costly repairs needed or it's more than you feel comfortable dealing with, you can back out of the contract without penalty.

Occasionally, you may be able to negotiate some repairs or get the bank to assist with closing costs.  You never know until you ask, but be prepared for a negative response to those requests.  Then if they agree, you'll be pleasantly surprised.

There are so many variables with short sales that it's imperative you have an agent who can assist you through the process.  Banks are insisting that if you are selling a home as a short sale that it be listed with an agent.  But even if you are the buyer, I recommend having an agent who has dealt with short sales before and can forewarn you of potential pitfalls and help navigate through the ever changing process.

I can't begin to cover all the ins and outs of distressed property sales here.  And every market varies.  So please consult the appropriate professionals to help you if you are considering buying or selling this type of property.  Of course I'm happy to assist if you are looking in the greater Charleston/Summerville, SC area.

Maria Pettis
Realtor, SFR, ePRO
Century 21 Properties Plus
maria@mariapettis.com
843-860-3901

Learn the Market When Relocating

Working in the greater Charleston real estate market means meeting a lot of folks looking to relocate here.  The reasons vary greatly from job transfers, military transfers, retirees and those looking for a warmer climate.  Often times, folks from other parts of the country are drawn by the idea of a lower cost of living.

There's a lot to research prior to making a move...what jobs are available?  how are the schools? what's the climate like? what kind of shopping and amenities are there?  what are taxes like?  But sometimes it seems that the most obvious question is overlooked until last...what is the cost of housing like?

I often get requests from people who say they are planning a move to the area and would like to start to see some listings.  I'm always happy to oblige.  But here's the thing, they often times have very unreasonable expectations about what you can get for your money in the Charleston area. 

For example, I once had a someone asking for a single family home on a large piece of property and it could be a little bit of a fixer-upper, but they wanted it to be on the water or with a water view.  What made this a difficult request to fill was the fact that they wanted to spend no more than $200,000.  Now, you can get a nice home for that price in this area, but waterfront is probably not going to happen.  This person really needed to learn the local market. 

Here's some things you can do to learn the local market and see if relocating makes sense for you...

First, take the time to talk to several lenders to see what you might be able to qualify for in terms of a new mortgage.  You'll need to discuss with them what your current income is, but MORE importantly, what your potential income in a new place would be, so you will need to do some research as to what employers in the area will typically pay if you have not already landed a new job.  But until you actually have employment there, most lenders will not approve a loan for you. 

Second, you need to ask yourself what's important to you in a home...aside from the obvious things such as square footage, number of beds/baths...do you need a garage?  (There are no basements here in the lowcountry, so for most people, this would be important.)  Do you need a large yard?  (Most newer subdivisions here have very small lots.)  How close do you want to be to shopping, an airport, highways, the beach?  (Being close to the beach here comes at a premium.  For instance, homes in Mt. Pleasant and other areas with easy access to the beach are much pricier than homes in Summerville or Goose Creek where the beach is a 40-45 minute ride.).

Third, contact one (or several) realtors in the area that you are considering moving to and get their take on things.  What does the type of home you want or need go for in this neck of the woods?  What alternatives are there?  Take the time to ask lots of questions about lifestyle, schools, taxes, amenities, commuting, traffic...anything of importance to you.

Lastly, if after all this research you feel this could be the place for you...schedule a visit to the area.  Not to house hunt, but to take a good look around for yourself.  Drive through neighborhoods, visit schools, pick up the local papers and pick up some of those magazines with listings of homes in the area.  If you've made a good connection by phone or email with a realtor, see about scheduling some time to meet them in person and further discuss your needs and get your other questions answered.

Following a process like this can seem time consuming, but with the internet at your fingertips much of it can be done comfortably from your own home.  And it will save you time and aggravation in the long run.

Visit these sites to help you research the Summerville and Charleston, SC areas!

For a free search of the entire Charleston area MLS with no registration required:
http://www.summervillerealestateonline.com/Search_MLS/page_1748693.html

For more on the buying process and a basic mortgage calculator:
http://www.summervillerealestateonline.com/Home_Buyers/page_2154263.html

For a cost of living comparison calculator from CNN (there are many others online as well):
http://cgi.money.cnn.com/tools/costofliving/costofliving.html



Maria Pettis
Realtor, ePro, SFR
Century 21 Properties Plus
http://www.mariapettis.com/
(843) 860-3901