5 Things About Short Sales You’ll Kick Yourself for Not Knowing
To get straight to the point, short sales aren’t short. Often, the process is delayed, but with better preparation you could avoid some wasted time. In this post, I’ll share 5 things you should be doing before making an offer on a short sale property in the Ocean City, MD real estate market, so you don’t kick yourself later.
#1 Do a Little Deed Research
Once you’ve found a property you’d like to buy in Ocean City, MD, you and your Realtor® should do some background research on the seller and the property. A great online tool is Maryland Land Records. It’s an online database of deeds and liens related to Maryland real property. Doing some background research on the mortgages can help you prepare for the possible mortgage lender the seller will be negotiating with to settle their debt.
Sometimes, a seller could have more than one mortgage loan. If that’s the case, the mortgage lenders will be getting less from the sale. Typically, the first mortgage lender may pay the second or third lender a set dollar amount to settle the lien. The more the first lender has to pay out, the less the net from the sale. If you’re looking for the best deal, it may not happen if the lender isn’t getting as much for the property.
If there is only one mortgage, the lender has a better chance of getting a higher net sale price, which could be a better deal for a buyer.
#2 Research Condo or HOA Liens
This works with doing some deed research. You’ll want to research the condo association or HOA dues to make sure they are current. Sometimes, the seller doesn’t update their real estate agent about being past due on the condo association or HOA dues.
If the seller is behind on their Condo Association or HOA dues, the lender may not pay all of the sellers past due balance. If the seller can’t pay the difference, the deal could fall apart. If you, the buyer, don’t want to pay it, your dream of owning that property could quickly come to an end.
#3 Find Out Who’s Negotiating the Short Sale
It’s important to make sure someone with experience is negotiating the short sale. In Maryland, it’s outside of the scope of a Maryland real estate agents license to negotiate a short sale on behalf of a seller. The seller needs to negotiate it or they need to hire a Mortgage Assistance Relief Service Provider or a Maryland attorney.
If it’s not disclosed in the MLS listing, have your real estate agent ask the listing agent about the status of the short sale and who’s negotiating it. It’s extremely helpful to know who’s handling the process, and whether you’re going to have to pay for it.
Sometimes, the negotiator charges a fee to the buyer to negotiate the short sale on behalf of the seller. This fee could be due at settlement. Other negotiators charge their fee to the listing broker for their negotiation services. I’ve seen a negotiator charge a fee as much as 3% of the sale price to a buyer. If you’re offering to buy an Oceanfront Condo for Sale in Ocean City, MD for $300,000, that could be paying a fee of $9,000 for the seller's negotiator.
#4 Get to Know the Property Condition
Before making an offer, you may not know every detail about the condition of the property. You should know that short sale properties are sold “As Is”, which means you get the property in the condition that it’s in and the seller is no obligated to make any repairs and the short sale lender won't make any repairs either. While at the property, do as much digging around as possible. I’ve climbed under houses that my buyer clients have been interested in to see if there was any water damage. I’m not afraid of getting dirty, and neither should you when buying a property.
#6 Work with an Ocean City, MD Realtor® that understands short sales
You can waste a lot of time working with a real estate agent that doesn’t understand short sales. Using a real estate agent who has experience with short sales gives you a better chance of having the correct disclosures, contract addendums, short sale information and even more realistic time frames and expectations in the process.
If you're searching for an Ocean City, MD Realtor® now, consider contacting me. I have years of experience navigating the short sale process and have even written a few eBooks about the short sale process. I also own a short sale negotiation company, Delmarva Home Relief, which has successfully negotiated hundreds of short sale transactions.
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