Timothy Powers of Alamo, a California mortgage expert and Realtor® says buying distressed can often mean stress for a homeowner.
Short sale was a term relatively unknown until the market collapse of 2008, says Timothy Powers. Alamo distressed properties are now in high demand, he adds. Unfortunately many are in terrible shape and may need more TLC than the average buyer can afford, points out Timothy Powers. Some Alamo homeowners in a short sale situation have let the property deteriorate due to diminishing finances.
Also, according to Timothy Powers, Alamo investors have a tendency toward buying short sale homes and foreclosures with cash, often beating out families who need bank financing. As the saying goes, “Money is King” and banks are happy to take cash over a promissory note in a short sale circumstance, says Timothy Powers. Alamo banks are already losing money and can’t afford to risk losing more.
Another issue with distressed sales, says Timothy Powers, is Alamo’s bank approval process. Most banks take quite a while to approve a short sale – sometimes many months. According to Timothy Powers, Alamo’s MLS system now requires agents to note a short sale status on the listing. Many buyers will steer clear of an unapproved short sale for the time involved in pushing it through. It’s a catch 22 though, notes Timothy Powers, as Alamo homeowners often wait to receive an offer prior to approaching the bank.
Often, claims Timothy Powers, Alamo banks are not even aware that the homeowner is trying to sell short of what they own. Real estate agents may puff up the property status by saying that it is a short sale to get offers on the table – sometimes just to look good to the client. When the bank hasn’t pre-approved a short sale, says Timothy Powers, Alamo real estate agents often note “offers subject to review by third party” on the listing.
Other problems that may delay a short sale process, says Timothy Powers: Alamo residents with a second mortgage or equity credit line. A secondary lien holder may stop a short sale in its tracks if they are not willing to settle for less than they are owed. Also, if a homeowner is still paying on the loan, reports Timothy Powers, their Alamo bank or mortgage company have no real incentive to accept less money. A buyer may find it helpful to determine whether or not the property has fallen into default, says Timothy Powers. If Alamo sellers can still afford the home – the bank likely won’t accept a short sale.
Says Timothy Powers, Alamo short sale buyers should be prepared for a long and drawn out home search. It is possible, however, and having an experienced Realtor® in the ring can make the difference between being knocked out or lasting until the banks ring the bell on a short sale.
Timothy Powers began his real estate career in 1989 three years after receiving a BS in Business Administration from St. Mary’s College. His passion and natural talent for real estate led him to open a franchise of Intero Real Estate Services and later Paragon Mortgage Bankers. On top of his professional duties, Timothy Powers also donates his time and skills to a project called East Bay Foreclosure – a firm he established to aid our nation’s military that are facing eviction and foreclosure. Timothy Powers is an Alamo Realtor® and mortgage broker who may be reached by calling (925) 855-1810 x22