Niceville Florida Short Sale Buyer Needs Help

Hi Wendy,

I’m a First Time Homebuyer in Niceville Florida (or rather am seeking to become one) and my wife and I found a house that is a short sale.

I’ve been researching the ins and out of buying a short sale but there are of course more questions then answers 🙂 The information I was given was a BPO of 290K, the home is listed at 230K, with an offer of 200K. This information was given freely by the listing agent.
The home is beautiful but it has since been vacated. No utilities, the home has since been broken into and vandalized, the refrigerator is tainted with an unholy smell and must be replaced, and the owner left a ton of debris behind when he/she moved out.  Is this common in a short sale? Is this really a foreclosure? From what I have been reading it seems like people continue to occupy their homes during a short sale, not abandon them to disrepair during the process.

I would be most thankful for any opinions or advice you could offer. From what I have read it is essential to obtain a buyers agent in a short sale, one with experience, so that will be the next thing I research (I saw the property yesterday), correct?  Cynthia

Dear Cynthia,

 1.  If a BPO (Broker Price Opinion) on file with a bank is significantly higher than the offer or list price, you’ve got a problem.  However, if the BPO is more than 90 days old, most lenders will order a new one.  Home prices are dropping in Niceville, so that would be a consideration.  Additionally, your agent might be able to provide her own market analysis of the property for the listing agent to submit to the lender, that might help them better understand the current market conditions and pricing scenario.

2.  You may be in an auction situation, as you wrote there is already is “an offer of 200k”.  That may mean the property is under contract, with an offer accepted by the homeowner, but yet to be approved by the short sale lender.  If the listing agent indicated she would be sending multiple offers to the short sale lender, that diminishes your chance of procuring the property.  Additionally, the Florida Association of Realtors legal advisors have stated that secondary offers must include an addendum stating they are “back-up” offers only.

3.  It is common for short sales to be vacant with no utilities.  Why?  Because the property may be a rental, and the owner was unable to find a tenant.  Or the owner may have been transferred.  The utilities are off because most sellers doing a short sale do not have the financial means to pay for utilities.  You should still have a home inspection, although most short sales are sold “as is”.  You should have the right to cancel your contract if the inspection is unacceptable. Understand that you may have to pay a small fee for the water, electricity, etc to be turned on in order to facilitate your home inspection.

4. A “short sale” is not a “foreclosure”.  A short sale is still owned by the homeowner.  A foreclosure is owned by the homeowner’s mortgage lender. The definition of a “short sale” is when the lender agrees to a accept a payoff for less than the remaining mortgage balance, and possibly forgive the entire shortfall, as well as pay the seller’s closing costs including the Realtor fee. The loss is either completely written off by the lender, a payment arrangement is made with the homeowner (promissory note), or a lump-sum for a potentially lesser amount is agreed to (cash contribution).

5. YES, it is essential to hire an experienced buyer agent in pursuit of your Niceville Florida home.  A short sale is a complex transaction, and a good buyer’s agent will help you structure your offer to your best advantage, and in such a way that might also fit the criteria of the short sale lender.