4 Sneaky Tricks Banks Use To Steal Your Money When You Buy A Short Sale
Our current real estate market is exploding with short sales. A short sale is when a home owner must sell their home but they owe more than the house is worth and they don’t have any money to bring to closing. If you are a buyer this means you can get a good price on a home just like a foreclosure but with little or no repairs to do on the house. A short sale typically produces a discounted selling price for the buyer and the seller is happy just to get rid of their house and stay out of foreclosure. Our market is full of these great buys.
Before you buy a short sale you need to understand the philosophy of the short selling bank. Banks are in the business of buying and selling money. When you give a bank your money you are their best friend. When the bank is trying to collect unpaid money they are greedy and ruthless. Customer service flies out the window when a bank is facing a loss. The banks will even attempt to go after THE BUYERS money when selling a short sale. The following tips will reveal some Sneaky Tricks short sale banks use to steal Your money as the buyer.
When you submit an offer on a short sale you will typically get a quick response from the seller and most of the time an accepted contract. This does not yet mean you are going to close on the house. Once the seller accepts your offer it is delivered to their bank along with a stack of financial documents provided by the seller and his real estate agent. The short sale is now under review by the seller’s bank to determine if they will accept your offer. This waiting period can last from a few weeks to months depending on the bank. However at some point the bank will say Yes or No or counter your offer at a higher price.
Once the bank accepts your offer you should ask for the approval letter and read every word of it. Here are some of the things it could say or do that will TAKE YOUR MONEY.
“You Can’t Squeeze Blood Out Of A Turnip”
TRICK #1 Sticking You With The Sellers Costs
The letter could approve the sale but leave out some of the costs normally paid by the seller. When you get to the closing table you discover your closing costs are about $1,000 higher than what you expected because you have to pay a seller cost. You might plead this is unfair and the owner of the home should pay it but remember they are selling because they are suffering a hardship and have no money. “You can’t squeeze blood out of a turnip”. You are left to either pay it or not close on the home and the short selling bank could care less what you do.
TRICK #2 The Home Warranty Game
Another trick banks use to steal your money is to refuse to pay any warranties. The seller accepted your offer and agreed to pay a home warranty and a gas line warranty but when you arrive at closing those costs have been moved to your side. Surprise surprise if you want them you are going to pay. If you had read the approval letter you would have realized that the short selling bank did not agree to these costs in the contract.
TRICK #3 The Tax Stack
In a short sale situation the taxes are delinquent. Every day the property sits the taxes get more and more behind. Suppose your short sale offer gets accepted for a closing date of June 30th. However you have some delays on your end by your lender and you don’t actually close until July 30th. There has been another 30 days of delinquent taxes built up and guess who gets stuck with the bill. That’s right! You do because the bank will not pay it and the seller cannot afford to pay it.
TRICK #4 The Incentive Swap
New laws have made it possible for distressed property owners to short sale their home and receive an incentive up to $3,000 at closing. The idea is that they will work with their bank and keep the home in good condition to preserve the asset. At the closing the sellers are paid an amount of money for their participation. Well... the banks want this money too. Here is a common scenario. A seller is expecting $1,000 at closing for doing his short sale. He borrows money to rent a moving truck, spends money to clean up the house, borrows more money to put a deposit on a rental and 1 day before closing he finds out he is not getting his $1,000. The bank had approved the original HUD without the incentive listed but did not adjust their proceeds for the final HUD. That’s a little technical but it means the bank was sneaky in how they displayed their numbers hoping that they would recover the seller’s incentive. The end result is a seller who refuses to close unless someone pays them $1,000. That someone could be YOU and suing the sellers to close really isn’t practical in these situations.
WE ARE THE EXPERTS
So there you have it! 4 sneaky tricks banks use to steal your money when you buy a short sale. A smart real estate agent who understands short sales will show you how to avoid these sneaky tricks designed to take your money. My team and I are used to dealing with these situations every day. We can head off these tactics up front and save you thousands of dollars. When it’s time to close on the property there will be no surprises and NO ADDITIONAL COSTS. Most real estate agents don’t understand short sales and cannot provide you with the service you need and deserve as a buyer. We are short sale experts and our team will not let you down. We are committed to getting you the best deal on your home and saving you the maximum amount of money.
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