Las Vegas Short Sales

Info 100Short sales are probably the most dynamic component of the Las Vegas real estate market. First of all, there is nothing “short” about a short sale and it’s a bit of mystery of how or why that term came about.

 

green info 32What is a short sale?

In summary, a short sale means that the bank is taking a loss on a mortgage to get rid of an asset. For example, if Johnny owes $100k on a house and finds a buyer willing to purchase it for $70k, Johnny is asking the lender to take a $30k haircut.

green info 322 Kinds of Short Sales

1. Unapproved: An unapproved Short Sale means that the bank is aware that the owner is motivated to do a short sale but the bank hasn’t formally agreed to take a haircut. The process for getting an approved short sale is hugely complex, involves a considerable amount of luck and is driven by the skill of an experienced short sale agent. An inexperienced short sale agent will slowly bleed everyone to death a year later. It takes an experienced buyer’s agent to recognize one. Unapproved short sales often take between 2 months and 2 years to close!!!

2. Approved: An approved Short Sale means the bank has formally agreed to take a haircut. This also means that a buyer has made an offer and the bank accepted it. A clever short sale listing agent will often generate a bogus offer just to keep the bank interested. Unfortunately, this means that if you want to purchase an approved short sale, you have very little time to act (usually less than 48 hours) and you won’t have time to fly here to kick and smell the property.

green info 32Short Sale Tips for Investors

Unless you have a tremendous amount of time and money on your hands, these will just eat your brain from the inside. If you really want to go down this path, here are some tips.

1. Try to focus only on the “approved short sales” that fall out of escrow. This is juicy ripe fruit that just hit the ground. The problem is that you have only a couple of days to pick it up. Your experienced buyer’s agent will keep you posted on these. On average, one falls out of the tree about every 3 days.

2. Be patient. Both the listing agent and the buyer’s agent have absolutely no control over this transaction. Some 12 year old at some remote lending institution is making all the decisions. There is no rhyme, reason, or timeline that makes sense to anyone. If you call your agent to ask what is going on, they will say “no idea.” Banks don’t return phone calls or emails, and have no sense of urgency. If the property actually closes, you will get 48 hours notice to jump through fire and cough up the entire balance.

3. Be prepared to pay more. 90% of short sales involve a last minute “we want more money” from the bank. They have strung you out for several months and they figure that if you held out this long, you will be willing to throw more chips on the table to stay in the game. This is the point where most investors want to pull their hair out. Right or wrong, legal or not, the bank has the investor by the leg and they know it…

In summary, you have to have serious patience, desire and stamina to make it to the finish line on one of these. Good luck.

green info 32Terms

Unapproved: On our site, these are labeled as simply “Short Sales” and here are our current recommendations. An unapproved short sale means the owner has the property on the market at a “wish” price. This is the price they wish it will be accepted by a buyer and by the lender. The lender has not necessarily stated they are willing to take a loss and sell the property at that price. Making an offer below the list price is simply a waste of time because the owner’s listing agent has come up with a number most likely to be accepted by the bank. The current trend is for the lender to counter the offer to meet market price.

Approved: On our site, these are labeled as simply “Approved Short Sale”. This means the bank has already accepted a dollar amount they are willing to sell the property. This also means that someone else had an offer on the property and backed out at the last minute or changed their mind. The problem with these is they are only alive for about 48 hours before someone else snaps them up. If you see an approved short sale on our site, and you want it, don’t mess around. Don’t bother making an offer below list price as the bank will not review the file again. It is what it is.

green info 32Procedure for making offers on short sales

These procedures are significantly different from our foreclosure procedures because of the time and effort required to submit them. Here are the things you will need to provide us:
1. Proof of funds in US dollars.
2. The amount of your offer.
3. Your signature and initials (unless they are on file).
4. A $500 check made out to “Title” for EACH submission. This deposit will be cashed at a title company and there is a small chance that you will never get this back. FAQs about this are answered below.

Answers to Frequently Asked Questions

info blue 100How long does it take to close an unapproved short sale?

3 – 7 Months. Lenders have gotten much better at their processes and they are actually improving timelines.

info blue 100What happens if my offer is not accepted by the owner?

We will simply return or re-use your $500 deposit.

info blue 100What happens to my $500 if the owner accepts my offer?

Either of these 4 scenarios may apply:

  • $500 Applied To Purchase: If the lender accepts your offer and we close the deal.
  • $500 Will Be Returned: If the lender doesn’t accept your offer or any counter offers.
  • $200 Will Be Returned: If the lender accepts your offer but you change your mind and we successfully find another buyer to take your place.
  • $0 Will Be Returned: If the lender accepts your offer but you change your mind.

info blue 100Will there be last minute drama and expenses at the close of escrow?

Yes. We have seen banks come at our investors with a couple thousand dollars at the last minute for some ridiculous fee OR they will make you sign some document in the middle of the night simply to make your life miserable.

info blue 100Does Limestone Investments LLC still charge minimum commissions?

Yes. Frequently, lenders will eat at our commissions at the very last minute. Most often, they will beat agents from 3% down to 2.5%. We have a $2k minimum so there there is a chance you will be paying the difference. Generally, you are safe for any properties over $90k.

info blue 100Are there any differences between tenant occupied short sales and owner occupied short sales?

Yes. Generally, owner occupied short sales are in “A” or “B” condition and we recommend these over tenant occupied short sales.

info blue 100Is there a chance that a tenant occupied short sale will remain?

Sometimes. However, we don’t make any guarantees. There are a million ways to scare off a tenant and we do absolutely everything we can to keep that tenant in place as long as the current lease is close to market price.

info blue 100Can I still have an inspection done?

Yes. This is a requirement at Limestone Investments. However, we recommend that you only do your inspection AFTER the lender approves the purchase price. If we do the inspection and find too many monkeys, you can walk away and get your $500 back. We usually do this just after the lender accepts your offer.