I am about to negotiate an offer with my first short sale listing. I did add on an experienced short sale agent to co list with me. However, I haven't been able to reach her yet. In the offer, the 'As Is' paragraph of the contract is crossed out but the short sale addendum I know will superscede that. My seller client may want to make 'small' repairs if it is necessary to sell her home. They want to do the inspection after approval from bank. Will the bank (Wells Fargo) have a problem with that? Also, they have a mortgage commiitment date of 3-2. Is it typical with short sales to see a commitment date so far away from the date off the offer? Thank you in advance.
All my inspections are done up front. Why would you want to get through 3-6 months of negotiations and THEN allow an inspection only to find something major wrong and then maybe only have 20 days to close jeapordizing the deal? Short sales being "sold as is" protect the seller in CASE there is some major issue with the property. Inspections are for INFORMATIONAL purposes only to the buyer and if there is something seriously wrong you want to know UP FRONT. You'll have to adjust your offer price or list price. Why should a seller put any more $$ into a property that they will NEVER see back?? Short sales are distressed property. People know that. You want the buyer committed to the sale, and one way to commit them is to get some money expended up front...inspections, appraisals, and a good deposit. There is nothing to hold a buyer to the sale if they haven't done the up front work.
The last thing I would want is to get through a short sale after negotiating for 6 months and THEN find out there is an issue that will hold up the sale. Get it done up front and sell it AS IS.
Short Sales for the most part are sold "as-is", and the Seller doesn't have the money to make repairs. Anything your client is willing and able to do to help the sale along should be done. also taking pictures of what needs repairing and submitting to the lender will help to justify any offers below market value. Most Buyers aren't willing to do an inspection before a Short Sale is approved. Which can cuase a "catch-22" if you will. Smitty's right, the more work you can get done upfront, the less time you'll spend on it, and the easier it'll be. The only commitments that I'm aware of is Title, which generally is 15-20 days out from the offer date, and the the S/S Addendum where it indicates how long they're willing to wait for an approval from the bank.
Jackie, Smitty is right, get the home inspection done up front, as soon as possible. We go by the following time table:
1) Accepted Offer
2) Home Inspection & P&S within 10 Days of Offer
3) Submit to lender within 48 hrs of P&S
4) Mtg Contingeny we set for "21 days from short sale approval"
5) Closing - "30 days from short sale approval" (ultimately though, the approval letter will outline when the short sale needs to close by)
Nowadays, we would never consider letting a Buyer carry the home inspection beyond p&s. Buyers beg, whine, plead, everything imaginable to get this pushed off, but we will never give in. It's just not worth it on our end to tie the property up and do all the short sale negotiations, only to find out that the condition of the property is unacceptable. We allowed it only once and that will be the last time.
As a buyer, I have seen owners commit to doing appraisals and making some repairs up front. I can also, agree that from a seller's standpoint, an inspection should be done up front as well. And, that's a good thing. Lastly, I have no problem placing a good time-dependent deposit up front. The way I see it, if the owner and listing agent is sincere, knowledgeble and committed, then I'll do the same.
I'm only going to look at a house if, I feel that it's worth waiting for. Why waste both of our time? On the other hand, there are a lot of money-pit short sale homes out there and, I just don't want to waste my time on them.......but I'm sure a flipper will come along soon.
There is an inspection company in our area that will do a pre-listing inspection for $99. In cases where the seller can afford this cost, I advise them to do the inspection upfront. The inspection is limited and does not replace the buyer's inspection but the report along with the seller's property disclosure will cut down on major surprises in the end. I have found that buyer's are reluctant to do an inspection prior to written short sale approval because of the cost.
This inspection report also serves as good amunition for the lender if we have to dispute a BPO value.
If it's a reputable resource and the limitations are defined, personally I'd say that's a good price for an inspection. Here, I've seen nothing for less than $300. As a buyer, my lenders requires a complete inspection so there's really no way of getting around it. BPO reports here cost about $100.
It is a pre-listing inspection only and is not to replace a buyer's inspection. Basically it covers the big issues and is invaluable in properly pricing the home. If I have to price below market, then I have professional backup for my list price. You are right about the buyer's inspection - it runs between $300-450 depending on size, age, etc.
It's really up to what the seller can pay for & are willing to have the repairs done ...most can't. That's also why the buyer gets a deal. However, I had a seller pay for fixing a garage door opener just so he would not be foreclosed on but he did have the money....most don't & don't care.
It is my belief, contrary to belief by some here, that the burden is really on the seller in this case. Surely the buyer want to make sure the home is structurely sound before any purchase, whether it is a cash or mortgaged purchase, however there are plenty homes for the buyers to choose from out their. If the buyer's lender won't lend them money on this house because it won't appraise or fail inspection to their standard, they'll lend money on another. Like it or not, it is just the way it is.
However, in looking at the other side of the equation, the seller is trying to avoid a real hardship in the form of a foreclosure. Look at it this way, no sale........no one get paid, neither the agents or lender. Do you have time to slip in a back-up offer? Will the bank accept your back-up offer? And, do you want to go through the same thing with another buyer. Maybe so or, maybe not. IMO, make any repairs you can and let everything else take it's course.