The Long and Short of Short Sales

From: Inman Wiki

If you are in the market to buy a home, you have no doubt heard the term “Short Sale”. No, this does not refer to sellers who are under 5’ tall. A “short sale” is industry jargon for a seller who owes more on the property than what it is worth. The seller in this situation needs the lender to accept a “short” loan payoff, or in other words accept less than the full amount due on the loan. So how does that affect you the buyer?
First of all, short sales require the lender to agree to the reduced pay off. Therefore, when you negotiate on a short sale, you are negotiating with two parties: The seller who owns the property, and the lender who holds the loan. You need the approval of both parties to get your offer accepted. It is important to make sure the seller has received preliminary approval from the lender, because if the lender does not agree to the terms you will have no contract. Therefore, it is important to question the seller and/or the seller’s agent to make sure the process is in place, and that the bank will cooperate. This process requires the seller to submit documentation to the lender demonstrating hardship, along with evidence that the market value is less than the outstanding loan.
Secondly, be prepared for a long process. Dealing with banks in a situation like this can sometimes be comparable to getting allergy shots… it can be a long, drawn out, and ultimately aggravating experience. Often you are dealing with layers of bureaucracy, and this can slow the process down. So short sales usually require patience on the part of buyers. It is also important to have interest rate protection during this process. In a normal transaction, buyers will typically lock in interest rates for 30 to 60 days. That may not be enough time for a short sale, and you want to avoid being 45 or 60 days into the sale only to find out that your rate lock expired, and your interest rate just went up ¼%. Plan for the worst case. It is good practice to include in the purchase agreement a time frame for lender approval, with a clause that gives the buyer the right to cancel the transaction if the lender does not approve the sale after a certain period of time. This way, as a buyer you are free to pursue other properties if the lender is dragging their feet.
Thirdly, be prepared for potential issues at close of escrow if the owner is still living in the home. Often times, sellers in this situation are angry and frustrated, and on occasion can damage the property, remove appliances, fail to maintain the landscaping, leave the property dirty and full of debris, or take other actions that will cost your money. Be sure to do a walk through prior to close of escrow. Since the seller theoretically has no money, any issues at close typically have to be negotiated with the bank.
Lastly, lenders like to sell properties “as is” in these situations, as they do not want to get into negotiations over property repairs. This is okay, but make sure you as a buyer have the right to inspect the property to your satisfaction, and the ability to cancel the contract if the inspections uncover issues with the property. And if there are issues that come up, you can certainly request that the bank resolve them. They are under no obligation to do so, but if the request is reasonable and it makes business sense for the band to agree, they usually will.
Short sales can be fairly straightforward, or very complicated. This depends on the stance of the lender. Some banks are much easier to deal with than others when it comes to short sales, As always you should seek out an experienced, professional real estate agent to help you navigate these waters.

Get Rid of 'Popcorn' Ceilings All At Once

Despite disruption, it will lower overall cost and improve home's resale value
Friday, February 29, 2008
By Paul BianchinaInman News
Q: I own a 40-plus-year-old house that has been remodeled from time to time and looks modern and is well-kept. Presently, I need to remove the "cottage cheese" ceiling from one large room. Is it in my best interest to remove this from all the rooms in the house? --Lorna K.
A: First of all, I need to make you aware of the fact that many older acoustic ceiling treatments -- commonly called "popcorn" or "cottage cheese" ceilings -- contained a small amount of asbestos fiber. Asbestos was common in many acoustic and drywall products until the 1970s and sometimes later, so a home that is 40-plus years old could fall into that category.
Removal of asbestos is governed by the Environmental Protection Agency (EPA), and under their guidelines you have some options for professional or do-it-yourself removal. For more information on asbestos and how to have it tested and removed, visit the EPA's Web site at www.epa.gov.
There are pros and cons to removing all the acoustic material at one time. On the plus side, you have the mess only once, and if you are hiring out the work, you'll save money by doing all the ceilings at one time. You also eliminate the asbestos risk, however minor. From a resale standpoint, buyers almost universally seem to dislike acoustic popcorn ceilings, so you will also improve the overall value of your home.
On the downside, scraping, retexturing and repainting all the ceilings in the house at the same time can be disruptive, time-consuming, and, if you're having the redecorating work professionally done, can be costly. Also, if the ceiling material contains asbestos and you are having it professionally removed, it can be a very expensive undertaking.
That said, if you have the option either way, my advice would be to get it all done at once.
Q: I have some type of blown-in insulation in my attic. I assume there is nothing wrong with moving some of the blown-in insulation to those areas that need it and putting new fiberglass bats in the area that now has no insulation. Note that my house has ceilings of various heights, and the original insulation installation could have been done more carefully. --David G.
A: Nothing wrong with that at all -- just try and get uniform coverage over everything so that you don't have any cold spots, and keep the insulation clear of anything that's heat producing. You could also have an insulation contractor come out and give you an estimate on re-blowing the entire attic up to at least R-38.
Q: I have a Kohler brand shower valve in my home, which is dripping. The plumbing advisor at Ace Hardware told me that it is difficult to fix the Kohler brand showers, and I should get a plumber who is familiar with Kohler brand. Is it really that difficult? Any tips if I try it myself? I am an OK, but not a great, handyman. Do I have to change the whole cartridge or maybe a washer? I got the cartridge changed about three years ago and it started leaking again. I changed only the seat and the washer in the faucet. --Paul T.
A: I am not familiar with any reason why a Kohler faucet is any more prone to drips than any other, or why you would need a plumber with specific experience. If you would like to try the repairs yourself, get a Kohler repair kit that is made for your specific faucet, and follow the instructions included. Be sure you utilize a Kohler kit, not anything else, and also be sure that you use all of the new parts that come with the kit.
If you have any doubts about doing this yourself, I would recommend that you contact a plumbing company that deals with service and repair work. It shouldn't be a very expensive service call, and you'll have the peace of mind that the repairs have been done correctly, and that you have a guarantee.
Q: How do I locate a seller of a dual flush water saver handle for a commode? --Richard J.
A: I would check out The Controllable Flush at www.athenacfc.com.
Remodeling and repair questions? E-mail Paul at paul2887@ykwc.net.