When to do Inspections?
It's been my practice in the past to have Buyers Agents not do inspections until after the Written Approval has arrived. I know that some other "Superstars" recommend getting the buyers to do inspections earlier, to get some "Skin in the Game". I met with a person from Pillar to Post yesterday. He states that he has been doing inspections for Short Sales, and the lien holders are actually paying for this. Of course, there are documents signed in advance that if the lien holder doesn't pay, they will still get paid. I love the concept of have an advanced inspection, but it's a very expensive endeavor. Anyone using this concept? If yes, how do you end up not paying for this process out of commissions?
Replies to This Discussion
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Permalink Reply by Bill Sloss on
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I read some of these and have to laugh. Why guess if a buyer is serious? You have a signed contract. Isnt that serious enough? You have or should have proof of funds or need a mortgage commitment. You should know what funding the house qualifies for or doesnt.
What changes on Day 61 or Day 91 for no hope of an approval that wasnt known before?
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Permalink Reply by Kelly W. Maynard on
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I have never had day 61 come and have a Buyer walk. I have been fortunate enough to have an approval prior to day 61 or within a week on all of my short sales thus far. A committed Buyer is different from a qualified Buyer. If I use a system that works, why change it?
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Im certainly not suggesting you change anything am happy youre having success.
I was just curious as to you noting numbers of days as if they were some indicator.
Frankly Im amazed at what I perceive the SS system is. You have a mortgagee who cant pay the mortgage. When they advise it is their intention to not pay or be unable to pay the mortgage the lender knows the house needs sold. I understand if there are multiple notes but I have difficulty understanding the 60-90 days on a single mortgage especially with a cash buyer that can close quickly without contingencies with what? At least 3 months notice (nonpayments)before the sale?So add 60 days + to that and I can see why there is a problem with committed buyers.
May your good fortune continue.
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Hi Bill,
Usually it takes about 60 days to get approval from the lender and then they give the normal 30 to 45 day close. So all in all, you are looking at about 3 months from contract acceptance to closing.
Not every Seller is behind on their mortgage. The majority of them are. Most of my short sales have been owners that have tried to do a loan modification, and are told they must be at least 2 months behind before the bank will consider them for a loan mod, and then the bank denies them, but now they are several months behind, and can't possibly get caught up.
It is sad. -
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Thank you for the reply.
I just dont get the amount of time required when it appears the end result isnt in much question.
I guess its just the bureaucracy. What might you get is a reasonable estimate of the percentage of approved short sales? What happens when yours if any are not approved? Does the amount of time passing an indication of approval?
Thanks
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This is exactly why most realtors hate short sales. Its pretty simple: Try to make the short sale as traditional as possible. All of the due diligence should be completed up front so you can detect any issues in the listing stage of the transaction. Why waste your time and money on a transaction that will never close. You should be implementing a manage to prevent crisis method in lieu of crisis management at the final hour. The price should not matter to the seller as this is a short sale, and they are not netting any funds form the transaction,
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Thats a great comment Elliott so I have to laugh when I read all the representing the seller stuff. The sellers best interest is in moving the property. Unfortunately many of the properties are distressed or have issues. So unless the seller is willing to grant a third party authorization for the buyer to talk to the bank that makes the sellers agent the biggest advocate for the sale of the property making the bank aware of the issues. So when theres very little communication from the sellers agent one has to question how much interest there is in getting the sale done since the seller isnt getting any money anyway. Whats the object of the exercise? Getting it done. Hard to do when you have an agent that hasnt done any due diligence nor made the bank aware of the condition of the property because theyre too busy representing the sellers interests with nonsense.
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Permalink Reply by Pam Graham on
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So, what happens when a higher offer comes in after you pend it, but before the ss approval? You realize NAR's attorney (local board attorneys as well) is stating we need to contact the bank about that new higher offer and ask them what they want done or it could be considered fraud? What if the bank wants that higher offer after the buyer has spent the money on an inspection?
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A contract is a contract. If a buyer signs a SSA and allows the property to be marketed and back up offers accepted shame on them. Of course theres nothing keeping the bank from doing what they want I suppose. But if I found out a sellers agent violated the intention of that contract well....we'll be talking. And I caught one dead after just delivering the signed contract that prohibited it doing it.
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Im happy you have success in doing it your way.
As an aside Im a committed cash buyer. With all due respect neither you nor the seller have the last say in the sale the bank does.
Im not going to outlay hundreds of dollars for an inspection on a maybe. Ill go elsewhere. Now if you want to have an intelligent discussion of the properties liabilities and can assure me those will be taken into consideration by the bank we can talk. But if you cant speak for the bank you cant speak for the bank.
Id be happy to tell you you pay for my inspections up front and Ill be happy to reimburse you at closing. Want to take that deal? Id think not. By your own argument if youre not willing to risk several hundred dollars then you must not be very good at what you do. Is that a fair argument? Im curious.
Time is of the essence. Why waste it by not getting to the matter at hand right away? And that doesnt start until theres an approval or an agreement how to value the property between all the parties. Im not talking about little things Im talking about major deficiencies and expense.
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Permalink Reply by Mike Rizzo on
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Thanks Bill. You said it very well. I list short sales and sell them to buyers. I don't think its right to require an upfront inspections ($300-$500) with a maybe it will close. As an agent in Phx, we are running a pretty robust market out here, although inventory is down, there are only a small percentage requiring upfront inspections. Agents requiring these kind of terms should realize that there is always another house for sale. They are probably the same ones that cut the commission of the selling agent on all deals, short sales or not.
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Thanks Mike. You have my respect its a tough business and unfortunately your herd is too big and it hurts guys like you who want to do it right. I feel for the short sellers. I do. All one has to do is check the court records and see whats up. The short sellers need help and a buyer. They know the condition of the property and why. Its not a secret. One walk through usually is all thats necessary. They want the house sold and as much as the debt forgiven as possible. Its a sad unique situation. Theyre in the middle. If I was a sellers agent all Id be saying is what does it take to make the sale between all the parties. Continued success to you.
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