Beware of Short Sale Surprises

SurpriseIn the market we currently have in the Northern Virginia it is likely you will have buyers that fall in love with a home that is listed as a “short sale.” In most cases there won’t be any problems with getting the property to the closing table. However the value of the business relationships that we develop as Realtors® can help immensely in keeping a “short sale” from becoming a nightmare for buyers.

Not all sellers in a short sale situation have been 100% upfront with their agent on how much they owe on the property. Perhaps it is out of embarrassment or maybe they think they can get away from the closing table without anyone knowing how much they actually owe. Even as a buyer’s agent checking the previous sales and tax records doesn’t give you an idea of what they may have done with their financing after the sale.

Recently I had buyer’s who were seriously considering writing an offer on a nice home in Alexandria. I spoke with the agent to clarify if the sellers had worked out everything with the bank and would they be able to come to the table with the money needed or have the appropriate letters from the bank that the amount owed would be written off. They assured me everything was taken care of.

After a couple of uneasy nights I decided to call one of the title companies that I work with on a regular basis and ask if they would do a pre-contract title search for me on the property. They readily agreed and what they found blew us away. The sellers had only told their agent about two loans-it turned out they had four loans on the property. Instead of being short 15K they were short 45K. Now it isn’t any of my business how they got themselves into this very unfortunate situation but it is my job to keep my buyers from walking blindly into this mess.I knew right away that this was a sale that would not go well. In fact we might have gotten 30 days down the road, completed and paid for a home inspection and who knows what else, if I hadn’t made the call to the title company before writing the contract. This is just another reason to keep your business relationships strong in our current market and why buyers should always have their own representation. It will save a lot potential headaches for agents and heartache for buyers when you find out the home you want to buy is in far worse financial condition than you know.

. In fact we might have gotten 30 days down the road, completed and paid for a home inspection and who knows what else, if I hadn’t made the call to the title company before writing the contract. This is just another reason to It will save a lot potential headaches for agents and heartache for buyers when you find out the home you want to buy is in far worse financial condition than you know.

One thought on “Beware of Short Sale Surprises

  1. Cindy,

    Good job avoiding that very frustrating situation of being under a contract with someone who can’t perform on it. Thanks for the idea on the “pre-contract title search.” I will use that if I have a buyer enter a similar situation. Thanks for sharing it publicly.

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