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South Lake Tahoe Short Sales: A Primer for Investors (Pt Six)

February 23rd, 2010 categories: For Buyers, For Sellers, Foreclosures, Lake Tahoe Real Estate, South Lake Tahoe Statistics, South Lake Tahoe, CA, short sales

South Lake Tahoe Short Sales: The zLender's DecisionWhich is More? What the Lender does to make a Short Sale decision.

This is the sixth of an eight-part series on short sales. Think of it as coming from the point of view of the home buyer / investor, although the short sale process is the same for the South Lake Tahoe seller as well.

The definition of a short sale is simply this: it is the sale of real property at a price that is below the amount owned on the property.

It should be noted to all potential South Lake Tahoe buyers that the short sale process varies somewhat from lender to lender, sometimes substantially; that a successful short sale purchase can be a tedious, uncertain, time consuming process. Not all offers on short sale properties meet with success, to be certain, and it is not uncommon here in South Lake Tahoe to find multiple offers on attractive, reasonably priced short sale homes.

(current South Lake Tahoe, CA short sale summary and statistics here)

Step One: The Property Evaluation (here)
Step Two: The Short Sale Application (here)
Step Three: The Hardship Letter (here)
Step Four: The Short Sale Package (here)
Step Five: The Offer and Purchase Agreement (here)
Step Seven: Negotiating with the Lender (here)
Step Eight: The Closing (here)

 Part Six : The Lender's Short Sale Decision

If the short sale package adequately documents the owner can not pay their mortgage, the lender should believe that the owner is heading toward foreclosure and/or bankruptcy.

To come to a short sale decision, the Lender will verify the documentation in the short sale package. Upon satisfaction that the situation is what it is, the lender twill ascertain a value for the property, which will then be juxtaposed to the amount due on the delinquent loan.

The Lender' short sale dilemma.The national average costs to a lender for a foreclosure is about $50,000. In South Lake Tahoe in the last 180 days, the median sold price for a short sale is $93,788 higher than that of a foreclosure. Each of these facts alone are the basis for a favorable short sale decision, and both are exceptionally compelling.

Most lenders use both an AVM (Automated Valuation Model) and a BPO (Broker Price Opinion) to look at they might be able to get for the property in a foreclosure. Some will add an appraisal into the mix as well. What's unique about South Lake Tahoe is AVM value aggregators are characteristically so inaccurate in this market (non conforming neighborhoods is the key reason).

If the lender thinks they will get more money from the short sale, they will approve it.

So again, the importance of the short sale package can not be overstated for a seller.

  • Lenders pay a real estate broker to do a "drive-by" BPO. But they rarely ever enter the home, and BPO's can be, and often are, less than accurate.
  • Computer AVMs are unreliable in the South Lake Tahoe market, nor do they ever have the means to show the current condition of a home either.
  • Repairs can be a necessary part of foreclosure, short sale consideration, and the seller must disclose that to the lender as well.

Step One: The Property Evaluation (here)
Step Two: The Short Sale Application (here)
Step Three: The Hardship Letter (here)
Step Four: The Short Sale Package (here)
Step Five: The Offer and Purchase Agreement (here)
Step Eight: The Closing (here)

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This entry was posted on Tuesday, February 23rd, 2010 at 12:38 pm and is filed under For Buyers, For Sellers, Foreclosures, Lake Tahoe Real Estate, South Lake Tahoe Statistics, South Lake Tahoe, CA, short sales. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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