Top 20 Frequently Asked Questions on Florida Short Sales and Foreclosures
A short sale and foreclosure expert compiled the top 20 frequently asked questions from buyers and sellers considering a short sale in Florida. A new website is launched to explain the process and where to turn for help. The site contains relevant news stories, live news feeds and helpful links for buyers and sellers.
A lot of sellers don't know where to turn for help and this compelled me to put together the website Florida Foreclosure Assistance.
Palm Beach, FL (Vocus/PRWEB) December 14, 2010
Kevin Dickenson is a Palm Beach real estate agent with Prudential Florida Realty and an expert in Florida foreclosures and short sales. Mr. Dickenson is in the top two percent of 64,000 Prudential realtors nationally and has compiled the top 20 most frequently asked questions from buyers and sellers considering a short sale.
1. Are foreclosure websites like RealtyTrac accurate?
"I signed up a month to try it out and discovered that homes listed under the bank owned category were often nothing more than contractor or HOA liens," said Dickenson. "The data is seriously flawed in my opinion."
2. What is a short sale?
A short sale occurs when a borrower owes more than the home is worth and submits a request to the lender for a discounted payoff.
3. What is a lis pendens?
A lender will file a lis pendens (lawsuit) against a borrower typically after 3 months of non-payment. When the suit is filed, the borrower is now in the “pre-foreclosure” phase.
4. What is the best way to buy a Florida foreclosure?
If the home is listed on the MLS, find a good realtor who knows the process and use him as your guide. If the home isn't listed on the MLS, the borrower will need to be contacted because they are in control of the property until the home is foreclosed. Keep in mind that borrowers in default may be very difficult to get in touch with.
5. Can a buyer contact the bank to buy the home after the lis pendens is filed?
Only the deed holder has the authority to sell the home prior to a final judgment of foreclosure. The lender will not talk to any third party unless the borrower has given the individual written authorization. Another option is for the lender to sell the note, but most banks don't want to be bothered with a single small transaction.
6. Is the bank obligated to accept the contract price agreed to?
No. If an owner accepts a short sale offer, the contract MUST be contingent upon the lenders agreement to a discounted payoff and there is absolutely NO guarantee the lender will agree. The lender will hire a real estate agent or appraiser to perform a "broker price opionion" (BPO) to determine fair market value. Be prepared for a counter from the lender if the offer price is low.
7. What does the borrower need to supply to qualify for a short sale?
The bank will require a lot more documentation to discount the loan compared to what was supplied to obtain the loan. The lender will typically request two years tax returns, the last 3 pay stubs, a financial statement, four months of bank statements and a hardship letter as a minimum. Banks employ forensic accountants to make sure the borrower is in true financial hardship and keep in mind that a lot of people borrowed money for homes they couldn’t afford using no-doc stated income loans. A borrower who misrepresented income may refuse to provide the required documentation if it proves fraud. The buyers contract should contain a right to cancel clause if the seller fails to submit a complete short sale package to the lender within 10 days.
8. The offer and short sale package was submitted over four months ago and we haven't received a response. What’s going on?
Banks are overloaded with short sale requests. If a lis pendens has not been filed, the file is at the bottom of the banks pile. If a final judgment of foreclosure has been filed, this means a court date has been set and the home will be sold at auction in less than 30 days. In this case, the file is at the top of the pile. If the lis pendens is filed, it's in the pipeline and the buyer should be prepared to wait at least 4 months. A good negotiator should follow up with a buyer every two weeks and buyers will need to be patient.
9. Can a Seller accept more than one short sale offer and submit it to the bank?
The owner can accept a backup offer, but the new Florida FAR/BAR short sale addendum does not allow the seller to submit backup offers to the bank until the contract in first position is cancelled. Make sure your agent is using the most recent contract package and have an attorney review all documents.
10. Who is taking care of the house during the four to twelve months the buyer is waiting for the bank to approve aFlorida short sale?
Nobody. Typically, the seller has vacated, the power is off and there is a good chance mold is growing in the home. The pool will turn green and black algae will burrow into the finish. Be prepared for the seller to strip the appliances, ceiling fans and light fixtures. Even worse, some owners will destroy the home out of anger. Make sure the contract provides a right of cancellation.
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