Understanding Murrieta CA and Surrounding Short Sale Real Estate May Be Your Best Investment.

By: Stefan West


Short sales are now a huge part of the Southern California real estate market. Many real estate brokers, let alone buyers, do not understand short sales and then tend to avoid them. The first big challenge in purchasing a short sale is finding an agent willing to put the extra effort needed. Most don't want to show these for quite a few reasons. The big three are short sales are much more difficult, buyers lack of patience, and they can be stressful if done wrong.

Let me explain these three challenges in order. First, short sales are more difficult because in the place of a two party situation with just a buying party and selling party, you have a four party deal with the buyer, seller, and two banks. And in this situation the seller and two banks don't act the way a traditional homeseller would act. The person selling the house is upside down financially and really wants the banks of their back. They don't always care about getting the best price which is an advantage for you. But the homeowner can also work a little against the purchase occassionally by not letting people see the house in the best condition or even at all.

Meanwhile, the banks aren't attached to the house, adhere to certain bank rules and can be difficult to reach and negotiate with. They often use power play type strategies in their efforts to get the most money. In fact, the first and second loans negotiate between themselves because what one institution gets financially the other doesn't. And getting in contact with those people require completed paperwork packages from the current owner and an offer from a potential buyer before the clock begins to tick. Eventually there has be an agreement between two banks, a seller, and a buyer. By the time you get this all set, a period of 2-3 weeks can easily pass. Plus with the significant amount of short sales on the market many banks are understaffed to handle the workload.

Once you are over that hurdle, the second biggest aspect is buyer impatience and lack of understanding. The most difficult type of buyer for a short sale is most often an excited first time purchaser unless they have a strong communication level with their broker. Because once the listing office has everything submitted to the financial institutes, the banks will take 10-14 business days to even look it and pass the completed package to a closer.

Preparing an pumped up young family to wait this out is tough. This is especially true in Menifee and neighboring real estate market since there are a large supply of properties available right now. Plus, buyers today have the people around them in their head advising them they should get better price or more whatever when they buy. Buyer patience is the paramount concern and should be discussed before any short sale homes are visited. If the buyers have the ability to be patient, they can get a phenominal price!

Here is an example. Last month I pointed out a house in Wildomar CA for bank short sale to a buyer of mine where they could get a house more than 75k off the market price. However, it might take a while for the banks to get back to us, perhaps as long as 3 weeks. The home was a great fit for the couple and was move in condition. Their response was in this market they felt they should get a response inside of 48-72 hours.

I chose to risk my client contact and said this great situation isn't one you should go after because the bank employees don't care about your needs. They work 9-5 and have no attachment to the property and if you want to miss a great investment, that is your choice. But I am willing to take on the task if you can have the patience. And if we get it, you will be moving in with significant equity and I will earn your business and referrals for the future. After a little more detail, they put in an purchase offer, were approved, and will move into their new house this month. Dedicated lines of communication, honesty, and patience works!

The last hurdle is stress. Part of this has already been discussed when dealing with patience. However, the unknown of what the bank will do, what people are advising you to do, and how drawn out the process is can get to you. For the real estate agent, working with the other agent and banks is not a lot of fun. For the client, not taking out your frustration on your broker is vital. Much of the possible stress is relieved by a good understanding about the situation and a twice a week update. If the buyer finds out that the banks have not returned calls, they shouldn't overreact.

With all that said, why do I suggest looking into bank short sales? Because bank short sale listings can be a fantastic opportunity to get a great property at a significant discount. Short sales homes are usually in much better shape than fully bank owned listings and often they are still being maintained nicely. Also, they can be the best for price negotiation for many of reasons.

At this time, banks are filled to the gills with short sale properties and the last thing they want to deal with is another, especially when there is a qualified buyer available. Why on earth would they ignore the opportunity while more expenses accrue or the real estate market goes down further? Their loss is your gain and an good agent's goal is to get you, the real estate client, the best investment possible for today and deserve your business the next time.


Stefan is a top performing real estate broker of Temecula CA and South Riverside County Real Estate and expert in the communties of Murrieta and Menifee real estate. Please visit www.stefanwest.com to see other articles.