Many people hear that short sales may be a waste of time. But here on Kauai, we beg to differ. The truth is, when you find a property you like and the property is a potential short sale, the agent you work with can make all the difference in the world.
Just so that we’re clear here, let’s make sure you understand what a short sale is. A short sale, is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold. The seller may or may not be in distress, meaning that the seller is behind on the mortgage. A seller may opt for a short sale even if they are current if they lose a job or for some reason are unable to fulfill their financial obligations.
So, what are some of the key things you will want to have on your side if you are pursuing the purchase of a short sale?
- Have Your Funds Together – when you go to purchase a Kauai short sale, the idea to keep in mind most of the time is hurry up and wait. Why? Because it may take some time for your offer to arrive at the desk of the Loss Mitigation Officer. That is the person that usually works for the bank or lending institution who handles the file of the seller and negotiates with any offers that are presented. Though it may take months for your offer file to arrive at the Loss Mitigation Officer, once a deal is struck, the bank will want you to perform immediately. You’ll want to have a pre-approval letter that is current if you are taking out a loan, and some type of statements proving that your cash funds are also available. This financial package is be submitted with your offer and in most cases required by the bank. So before writing offers, get your financial house in order!
- Good things come to those who wait – most of my adult life I’ve heard it said that “The fruit of the tree of patience is very sweet indeed”. Well, that adage certainly applies to short sales in real estate. A buyer needs to be patient as well as to expect the unexpected. There may be multiple lien holders at stake and getting everyone to “play nice” together is not always as easy as it may sound, especially when it comes to money. So, if you’re in a hurry, a short sale is not where you want to focus. But, if you’re patient, you may very well get the very home and very deal you are hoping for.
- Work with a market specialist who understands short sales – Why should you work with someone like me if you are going to purchase a Kauai short sale. First of all, I’m an Accredited Buyer’s Representative, and as such, I’ve taken additional training to insure that I understand how to best serve buyersÂ and maintain my fiduciary responsibility to them. I’m all about representing you. Secondly, I understand the key questions to ask any listing agent to find out the status of the sale, any prior negotiations with the bank, and as much relevant detail that would pertain to the transaction’s prognosis. Thirdly, I am a featured agent on RealtyTrac, the industry’s leading foreclosure source, and as such, I am emailed anytime any property on the island of Kauai goes into foreclosure. I maintain an active database of current foreclosures and short sale opportunities and know where those properties are in the foreclosure process. Finally, I know how to put the “short sale package” together, whether the listing agent does or not, to hedge our bets for success once the offer arrives on the desk of the loss mitigation department.
- Kauai Market Knowledge -Understanding our local Kauai real estate market is key. If you want to be sure you are getting a deal you’ll need market comparables of properties recently sold and that are in escrow. Sellers, whether they are a bank, a distressed homeowner, or someone who simply needs to sell for other reasons are all competing with each other. The market is like a price war and a beauty contest. The property needs to be the best of class in that price range. You’ll want a market specialistÂ brings that brought spectrum of knowledge to the table and puts that knowledge to work for you. You may choose to write multiple offers, knowing that short sales can have some improbable turns or that some properties may go to auction while you are pursuing them.
If you have any questions about short sales, shoot me an email. I’ll do my very best to answer or research the answer if I don’t know.Â Watch this video i prepared for a buyer client of a short sale listing in Kilauea at 6 Hookui Place. While the home needs some updating, the lot is over 18,000 sq. ft, backs up to the Kilauea Stream, and has the potential for adding another structure. The second water meter is installed already.