CALIFORNIA REAL ESTATE PRIMER – Buyer’s Short Sale FAQs

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This article is intended to be a general discussion only and should not be considered legal advice. Your use of it does not create an attorney-client relationship. Any liability that might arise from your use or reliance on this article or any of its links is expressly disclaimed. This blog is not legal, accounting or tax advice, is not to be acted on as such, it may not be current, and is subject to change without notice.

Over the course of time, we have fielded a lot of questions from buyers regarding short sales and some of those questions are more frequently asked than others. The questions below are the more frequent ones we’ve been asked:

 1. What is a short sale?

A short sale is the process by which homeowners can sell their home for less money than they actually owe on the mortgage(s). This is accomplished by providing proper documentation to the lender(s) to convince them to reduce the mortgage balance to allow the sale. If the sale is approved, the mortgages lender(s) will actually take a loss on the mortgage.

If a bank approves the discount of a mortgage, the home can be sold for a price lower than the total debt on the property without the seller having to come up with cash to cover the shortfall. The mortgage is satisfied and any foreclosure process stops.

2. Why would a bank or mortgage lender want to cooperate with a short sale?

A common saying is that banks are in the business of lending money and do not want to own real estate. While this is a little misleading, it is essentially true. When banks foreclose on a property it is a long and expensive process and generally means holding the property in their inventory as a non-performing asset. Banks have a limit to the amount of non-performing assets they want to hold. Once this limit is exceeded, they have strong incentives to get rid of the properties at discount prices.

For a lender, agreeing to a short sale avoids many of the costs associated with the foreclosure process. Attorney’s fees, delays from borrower bankruptcies, damage to the property, costs associated with resale, property tax, insurance, etc., must all be paid by the bank during a foreclosure. In a short sale scenario, the lender is able to cut its losses by getting rid of the property faster and at a lower cost.  The most important element in the lender’s decision process is whether or not the property is “underwater.”  If so, then it can’t be sold for an amount equal to or greater than the mortgage and a short sale may be a viable solution.

3. How does a bank determine the price it will accept on a short sale?

Every bank has a specific method of deciding how much they’ll accept on a short sale. Give me a call, Mikey Hall, at 949-887-1625 and I’ll explain it to you.

 4. Can I really get a deal on a short sale home?

Yes, you can, but not every short sale is a deal. You still have to do your research and estimate the current market value of the home. This is one of the areas where a knowledgeable real estate agent’s level of experience really pays off.

5. Who pays the real estate commissions on a short sale?

In a standard sale, commissions are subtracted from the seller’s funds and paid out of escrow to the Realtors. In a short sale, the seller has no funds in escrow which means the commissions end up being subtracted from the monies that would go to the lender. So, the lender ultimately is the one paying the entire sales commission.

6. Are short sales guaranteed to work?

No. All of the criteria must be met before a bank will even consider a short sale. Even then it isn’t easy to convince a bank that the market value of the home is lower than what they are owed.

Even if all the paperwork has been correctly completed it can take several weeks, or even months, only to be denied. If the lender does not approve the short sale, no transaction occurs. The Purchase Agreement becomes void and the listing continues. There are, however, ways to put a time limit on the lender’s time to issue approval.

In a rising market the delay in a short sale approval runs against the buyer for at least two reason 1) The buyer’s purchasing power decreases as prices increase; and, 2) there is no guarantee the lender will approve the sale and the delay may cause the buyer to be priced out of the market.

A falling market has just the opposite affect because a buyer’s purchasing power increases as prices decrease.

7. How long does a short sale take to complete?

From a few weeks to several months.

8. What if the house I want needs repairs.

Remember, when an owner short sells their home it’s because they are suffering a financial hardship. This means there is no money for repairs and as a buyer you can’t reasonably expect the seller to do much in the way of repairs. The good news is we have had some success convincing lenders to repair termite damage and to make reasonable repairs relating to safety. But, this type of cooperation is dependent on the expense involved, the nature of the repair, the purchase price being paid and the direction of the market.

9. What if the house I want has liens on it?

Liens can complicate matters because the owner will not have the financial capability of removing them. Depending on a number of factors, including the real estate market and the purchase price, the lender might be persuaded to clear the liens. Or, sometimes the lien holders themselves might be convinced to reduce their liens. A short sale in this circumstance will take substantially longer.

10. I’m an investor, can I buy a short sale?

The simple answer is yes, you can. However, there can be serious complications.

11. Can I buy the short sale for the price stated in the listing?

An experienced Realtor can quickly tell you whether or not the property is priced unusually low. If so, the home was probably intentionally priced that way to attract offers which might prompt the lender into letting the Realtor know what price it will accept. In which case, the chances of buying the property at the asking price may not be very good.

On the other hand , the property might be priced correctly and your chances of getting the property at the asking price will be reasonably good.

12. How long will it take to get bank approval of my offer?

The answer to this question depends on the expertise of the listing agent, which bank is involved, and how many loans are on the property. Once approval is obtained, the property can go into escrow which takes no longer than a standard sale.

14. Will the banks negotiate on price?

Yes.  More in down markets and less in up markets.

15. Do I get title to the property when I buy a short sale?

Yes, title is transferred to the buyer at the close of escrow, just like in a standard sale.

16. Are my property taxes based on the amount of debt that was on the short sale property?

No. In California, your property taxes are based on the purchase price of the home.

17. Can I transfer my property tax base to a sale short?

Possibly, depending on whether or not you meet the requirements. You might want to read our article entitled, “Transfer Your Property Tax Base Year Value To Your New Home“.

As the housing markets recover, fewer and fewer homes will be underwater until finally the short sale will again become an unusual event.

1 Mikey & Pixey Best 1

“ASK MIKEY”

http://www.AskMikeyHall.com

AskMikeyHall@gmail.com

voice: 949-887-1625

fax: 866-764-6325

DRE #00792478

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OTHER INTERESTING AND INFORMATIVE INFORMATION SOURCES

OC Property Management & Sales, Inc.

DRE Lic# 01886215

www.OCPropMgmt.com

OCPropertyMgmt@gmail.com

voice: 949-505-3838

fax: 866-764-6325

THE WESTRIDGE NEIGHBORHOOD – Pessaggio

  The Westridge Neighborhood
   The Passeggio Community Association

 

The Passeggio HOA, is a sub-association of the AVCA Master Association, and is a residential community of 111 exquisite condominiums located in the Westridge neighborhood of Aliso Viejo, California. The tract was built in five phases by the D.R. Horton company.

The Passeggio is located along the edge of the Aliso Canyon and many of the units have spectacular views of the Canyon. The Passeggio is conveniently located near the Westridge community park and is just a few minutes away from the Aliso Viejo town center with its shops restaurants and theaters.

The Passeggio has five different models of condominiums:

The Plan One is a 2 bedroom, 2 bath, carriage (second floor) unit with approximately 970 square feet of space. There is a second floor deck off the living room and a 1 car garage with direct access.

The Plan Two is a 2 bedroom, 2 bath, carriage (second floor) unit with approximately 1,223 square feet. The unit has direct garage access and was originally offered with an optional 3rd Bedroom conversion of the den.

The Plan Three is a 2 bedroom, 2.5 bath, two level unit with a 2 car garage with direct access. The unit is approximately 1,163 square feet.

The Plan Three X is a 3 bedroom, 2.5 bath, two level unit with a 2 car garage with direct access. The unit is approximately 1,349 square feet.

The Plan Four is a 3 bedroom, 2.5 bath, two level unit with a 2 car garage with direct access. The unit is approximately 1,397 square feet.

The information contained herein is deemed reliable, but must be independently verified.

Westridge Park

A Place For The Kids To Play

Other Interesting and Informative Websites

OC Property Management & Sales, Inc.

DRE Lic # 01886215

www.OCPropMgmt.com

OCPropertyMgmt@gmail.com

voice: 949-505-3838

fax: 866-764-6325

THE WESTRIDGE NEIGHBORHOOD – Skyview

  The Westridge Neighborhood

  The Skyview Community Association

The Westridge Skyview Community Association

The Skyview tract of detached single family homes is composed of two separate tracts within the Westridge neighborhood of the city of Aliso Viejo. Both Skyview tracts are accessible off Oak View Drive. The original builder was Shea Homes. Skyview is not gated, and does not have a pool, spa or tennis court.

Access to the 73 freeway is only a short drive away. While located in a rural setting, the Westridge communities are positioned within a short distance of the ocean and its resort towns; freeway arteries leading to major employment areas, and the shops, restaurants and amenities of Mission Viejo, Laguna Beach and Aliso Viejo.

The 73 freeway links up with the 405 freeway corridor and provides quick access to the financial centers of Fashion Island Newport Beach, the John Wayne airport area and South Coast Plaza. The 5 freeway links up with the Tustin employment centers and shopping centers.

Skyview has five different models of homes:

The Baumgarten (model 1-A) is a 3 bedroom, 2.5 bath two level home with a 2 car garage and approximately 1,774 square feet. A fireplace is located in the family room and the front entry is through the living room. All of the bedrooms are upstairs and an optional deck off the master bedroom was offered by the builder.

The Baumgarten (model 1-B) is approximately 1,961 square feet and is a 4 bedroom 2.5 bath home is the model 1-A floor plane with a optional 4th bedroom.

The Berry Home (model 2) is approximately 1,971 square feet and is a 3 bedroom, 2.5 bath 2 level plan with a 2 car garage. This plan has a nook adjacent to the kitchen, an optional second floor deck and an optional 4th bedroom.

The Massey Home (model 3-A) is approximately 2,062 square feet and is a 3 bedroom, 2.5 bath 2 level home with a 2 car garage. This model was offered with an optional master bedroom retreat, an optional “bunk” room and an optional deck off the master bedroom. Additionally, an optional loft conversion to a 4th bedroom was offered by the builder.

The Massey Home (model 3-B) is approximately 2,201 square feet and is the model 3-A floor plan originally offered with a suite of at least 5 different bedroom/loft options.

The information contained herein is deemed reliable, but must be independently verified.

A Place For The Kids To Play
Other Interesting and Informative Websites

OC Property Management & Sales, Inc.

DRE Lic # 01886215

www.OCPropMgmt.com

OCPropertyMgmt@gmail.com

voice: 949-505-3838

fax: 866-764-6325

THE WESTRIDGE NEIGHBORHOOD – Woodlands

  The Westridge Neighborhood

  The Woodlands Community Association

  Westridge Park

  A Place For The Kids To Play

The Woodlands tract of single family detached homes lies in the Westridge neighborhood, within the city of Aliso Viejo. There are 74 homes in Woodlands. The community is not and has no pool or spa. Woodlands is located off Oak View Drive at Trail Canyon Drive. The original builder was Brookfield Homes. A few miles to the west is the Pacific Ocean and the famous city of Laguna Beach.

Access to the 73 freeway is only a short drive away. While located in a rural setting, the Westridge communities are positioned within a short distance of the ocean and its resort towns; freeway arteries leading to major employment areas, and the shops, restaurants and amenities of Mission Viejo, Laguna Beach and Aliso Viejo.

The 73 freeway links up with the 405 freeway corridor and provides quick access to the financial centers of Fashion Island Newport Beach, the John Wayne airport area and South Coast Plaza. The 5 freeway links up with the Tustin employment centers and shopping centers.

Woodlands has four different models of homes:

The Plan 1 (Model A) is a 3 bedroom, 2.5 bath two level home with a 2 car garage. Direct garage access is located through a service entrance into the kitchen. A fireplaces have been located in the living room. An optional bedroom was originally available in the upstairs loft space and an optional den was offered instead of the second bedroom. The master bedroom has an attached bathroom suite and walk-in closet. The laundry room has been placed upstairs. This model is approximately 1,499 square feet.

The Plan 2 (Model B) is a 4 bedroom, 3 bath, two level home with a 2 car garage. Direct garage access is through a service entrance in the island kitchen. A fireplace is located in the living room and an optional den or fourth bedroom downstairs was originally offered. Upstairs the master bedroom has an attached bathroom and both standard and walk-in closets. The second bedroom upstairs opens onto a deck over the garage entrance. This model is approximately 1,784 square feet.

The Plan 2X (Model C) is a 4 bedroom, 3 bath, two level home with a 2 car garage.. This alternative plan uses the Plan 2 design with an optional upstairs retreat. An optional extension to the master bedroom creates an attached retreat. This model is approximately 2,067 square feet.

The Plan 3 (Model D) is a 3 bedroom, 2.5 bath, two level home with a 2 car garage. Direct garage access for the 2 car garage is through a service entrance opening in the central hallway. This is an upside done plan with the bedrooms and family room on the first floor and the kitchen, dining room, living room and master bedroom on the second floor. This model was originally offered with an optional downstairs den in the place of the third bedroom. A laundry room has been located on the first floor at the back of the house. This model is approximately 1,894 square feet.

The information contained herein is deemed reliable, but must be independently verified.

Other Interesting and Informative Websites

OC Property Management & Sales, Inc.

DRE Lic # 01886215

www.OCPropMgmt.com

OCPropertyMgmt@gmail.com

voice: 949-505-3838

fax: 866-764-6325

THE WESTRIDGE NEIGHBORHOOD – Silver Oaks

  The Westridge Neighborhood

 

  The Silver Oaks Community Association

  A Gated Community

 

  Close To The Westridge Park

 

  And A Place For The Kids To Play

The Silver Oaks tract of single family detached homes lies in the Westridge neighborhood, within the city of Aliso Viejo. There are 81 homes in Silver Oaks. The community is gated and has no pool or spa. Silver Oaks is located off Oak View Drive. The original builder was Shea Homes and the tract was completed in 9 phases. A few miles to the west is the Pacific Ocean and the famous city of Laguna Beach.

Access to the 73 freeway is only a short drive away. While located in a rural setting, the Westridge communities are positioned within a short distance of the ocean and its resort towns; freeway arteries leading to major employment areas, and the shops, restaurants and amenities of Mission Viejo, Laguna Beach and Aliso Viejo.

The 73 freeway links up with the 405 freeway corridor and provides quick access to the financial centers of Fashion Island Newport Beach, the John Wayne airport area and South Coast Plaza. The 5 freeway links up with the Tustin employment centers and shopping centers.

Silver Oaks has nine different models of homes:

Mangis 1 – A (Model A) is a 4 bedroom, 4 bath two level home with a 3 car garage. In this model the garage is two cars wide with a tandem space on one side allowing 3 car parking. Direct garage access is located through a service entrance into the breakfast nook adjacent to the kitchen. Fireplaces have been located in both the family room and the living room. An optional recreation room was available downstairs next to the fourth bedroom. The downstairs floor plan is broken up by an interior atrium. An optional loft was offered upstairs near the stairs. The master bedroom has a single large walk-in closet and an attached bathroom suite. The laundry room has been placed upstairs. This model is approximately 3,407 square feet.

Mangis 1 – B (Model B) is a 3 bedroom, 4 bath, two level home with a 2 car garage. This alternative plan uses the Plan 1 – A tandem parking space for an optional bedroom/office. This model is approximately 3,607 square feet.

Mangis 1 – C (Model C) is a 4 bedroom, 5 bath, two level home. This alternative plan uses the Plan 1 – A tandem parking space for an optional bedroom and the interior atrium space as an optional office. An optional extension to the master bedroom creates an attached retreat. This model is approximately 3,882 square feet.

Pagano 2 – A (Model D) is a 4 bedroom, 4.5 bath, two level home with a 2 car garage and a separate 1 car garage. For a total of 3 car parking. Direct garage access for the 2 car garage is through the optional bedroom/office, and direct access for the separate 1 car garage is thru the study. The Plan 1 – A interior atrium is now a courtyard at the front of the house. A breakfast nook is located adjacent to the kitchen. Fireplaces have been placed in family room and the living room. Upstairs the master bedroom has one standard closet and a large walk-in off the attached master bath suite. An optional loft is located can be located above the dining room. This model is approximately 3,705 square feet.

Pagano 2 – B (Model E) is a 5 bedroom, 5.5 bath, two level home with a 2 car garage. The Plan 2 – B is basically the Plan 2 – A with an extra optional office space gained at the expense of the 1 car garage space. This model is approximately 3,905 square feet.

Pagano 2 – C (Model F) is a 6 bedroom, 6.5 bath, two level home with a 3 car garage. The Plan 2 – C is basically the Plan 2 – A with a bedroom and bath option located in the 1 car garage space. 3 cars wide and an optional downstairs bedroom/office is offered. This model is approximately 4,147 square feet.

Powell 3 – A (Model H) is a 4 bedroom, 4.5 bath, two level home with a 3 car garage. This model uses a separate 1 car garage giving parking for 3 cars. The service entrance for the 2 car garage is through an optional office/bedroom and the 1 car garage opens into a nook overlooking a small gated patio in the front of the house. A courtyard is located off the optional bedroom/office. The island kitchen is immediately adjacent to the family room. Fireplaces have been located in both the family room and the living room. The upstairs master bedroom complex includes a bedroom, retreat, bathroom suite and walk-in closet. This model is approximately 3,753 square feet.

Powell 3 – B (Model I) is a 5 bedroom, 5.5 bath, variation of Plan 3 – A with a 2 car garage. The square footage of this model isn’t listed in an authoritative source.

Powell 3 – C (Model J) is a 6 bedroom, 6.5 bath, variation of Plan 3 – A with a 2 car garage. This model is approximately 3,957 square feet.

The information contained herein is deemed reliable, but must be independently verified.

Other Interesting and Informative Websites

OC Property Management & Sales, Inc.

DRE Lic # 01886215

www.OCPropMgmt.com

OCPropertyMgmt@gmail.com

voice: 949-505-3838

fax: 866-764-6325

THE WESTRIDGE NEIGHBORHOOD – Oakview

The Westridge Neighborhood

 

 

 

The Oak View Community Association

  Gated Community

The Oakview tract of single family detached homes lies in the Westridge neighborhood, within the City of Aliso Viejo. There are 115 homes in Oakview. The community is gated and has no pool or spa. The Oakview is located off Endless Vista and Oak View Drive. A few miles to the west is the Pacific Ocean and the famous city of Laguna Beach.

Access to the 73 freeway is only a short drive away. While located in a rural setting, the Westridge communities are positioned within a short distance of the Pacific ocean and its beaches; freeway arteries leading to major employment areas, and the shops, restaurants and amenities of Mission Viejo, Laguna Beach, and Aliso Viejo.

The 73 freeway links up with the 405 freeway corridor and provides quick access to the financial centers of Fashion Island Newport Beach, the John Wayne airport area and South Coast Plaza. The 5 freeway links up with the Tustin employment centers and shopping centers.

Oakview has seven different models of homes:

Badner Home 1 – A (Model A) is a 4 bedroom, 3 bath two level home with a 3 car garage. In this model the garage is two cars wide and one of spaces is tandem allowing 3 car parking. Direct garage access is located through a service entrance which opens into a hallway near the guest bath. A fireplace has been placed in the family room which is adjacent to the breakfast nook and island kitchen. A downstairs bedroom/optional office has been placed downstairs. A small courtyard separates the dining room and the living room. A second fireplace has been placed in the living room and the dining room is open to the second level. The master bedroom has double walk-in closets and an attached bathroom suite. The laundry room has been placed upstairs and the second and third bedrooms are connected to the master bedroom by means a walk way open to the dining room and entry hall below. This model is approximately 2,841 square feet.

Badner Home 1 – B (Model B) is a 5 bedroom, 3 bath, two level home with a 2 car garage. This alternative plan uses the Plan 1 tandem parking space for an optional bedroom 5th bedroom or an enlarged “super” office/bedroom. This model is approximately 2,995 square feet.

Ruth Home 2 – A (Model C) is a 5 bedroom, 4.5 bath, two level home. The garage is 2 cars wide with 1 tandem space creating parking for 3 cars. Direct garage access is through a service entrance leading into the downstairs laundry room. Fireplaces are located in both the family room and the living room. The living room is open to the second level. An optional bedroom/office is located downstairs. A circular staircase leads to the second floor. The master bedroom has two walk-in closets and its own bathroom suite. This model is approximately 3,118 square feet.

Ruth Home 2 – B (Model D) is a 5 bedroom, 4.5 bath, two level home with a 2 car garage. This model is identical to the Plan 2 except the tandem parking space has been used to create a large bonus room. The basic plan two upstairs options remain the same. This model is approximately 3,322 square feet.

Ruth Home 2 – C (Model E) is a 6 bedroom, 5.5 bath, two level home with a 2 car garage. The Plan 2-C is basically the Plan 2-B with an extra bedroom gained at the expense of the bonus room. This model is approximately 3,322 square feet.

Trigg Home 3 – A (Model F) is a 5 bedroom, 4.5 bath, two level home with a 3 car garage. The garage is 3 cars wide and an optional downstairs bedroom/office is offered. Fireplaces have been placed in both the living room and family room. Upstairs the master bedroom has two walk-in closets and an attached master bath suite. The master bedroom is separated from the other upstairs bedrooms by large loft. This model is approximately 3,537 square feet.

Trigg Home 3 – B (Model G) is a the model 3 – A with the upstairs loft converted to an optional 6th Bedroom. This model is approximately 3,537 square feet.

The information contained herein is deemed reliable, but must be independently verified.

Westridge Park

A Place For The Kids To Play

verified.

Other Interesting and Informative Websites

OC Property Management & Sales, Inc.

DRE Lic # 01886215

www.OCPropMgmt.com

OCPropertyMgmt@gmail.com

voice: 949-505-3838

fax: 866-764-6325

THE WESTRIDGE NEIGHBORHOOD – Kensington

   The Westridge Neighborhood

   Private Gated Community

The Kensington is a gated community of single family detached homes located in the Westridge neighborhood of the city of Aliso Viejo . The secluded Kensington community, includes a total of 154 estate size homes with a single entrance off Oak View drive.

Kensington owners do not have an association pool or spa. The original builder of the tract was Richmond American. Note that Square footage may vary depending on the model and model options selected by the original owner, as well as, additions constructed later.

Access to the 73 freeway is only a short drive away. While located in a rural setting, the Westridge communities are positioned within a short distance of the ocean and its resort towns; freeway arteries leading to major employment areas, and the shops, restaurants and amenities of Mission Viejo, Laguna Beach and Aliso Viejo.

The 73 freeway links up with the 405 freeway corridor and provides quick access to the financial centers of Fashion Island Newport Beach, the John Wayne airport area and South Coast Plaza. The 5 freeway links up with the Tustin employment centers and shopping centers.

  Close By Westridge Park

   A Place For The Kids To Play

The Kensington has six different models of homes:

The Chesapeake House (model A) is approximately 2,842 square feet and was originally offered without upgrades or options as a 4 bedroom, 2.5 bath home with a 3 car garage (one space is tandem). The ground floor included a living room, dining room, library, family room, nook, kitchen and laundry. All bedrooms were on the second floor in the standard construction. In addition to the standard construction, Richmond American offered an optional studio and optional 5th bedroom and bath. On the second floor optional retreats and dens were also offered.

The Chesapeake House (model B) is approximately 3,223 square feet and is a model A alternate with a similar standard floor plan and options. The model B however was originally designed with 2 car garage (the tandem garage was either a 5th bedroom or studio).

The Berkeley House (model C) is approximately 3,072 square feet and was originally offered without upgrades or options as a 3 bedroom, 3 bath home with a 3 car (tandem) garage. Builder options included a second floor loft/bedroom and optional ground floor bedroom and optional writer’s room or bedroom in the tandem space of the garage.

The Berkeley House (model D) is approximately 3,072 square feet and is a model C alternate with a similar standard floor plan and options. The model D (like the model B above) however was originally designed with a 2 car garage (the tandem garage garage was either a bedroom or a writer’s room.

The Carrillo House (model E) is approximately 3,681 square feet and was originally offered without upgrades as a 5 bedroom, 3 bath home with a 3 car (tandem) garage. A first floor game room option and a second floor bedroom option were offered by the builder.

The Carrillo House (model F) is approximately 3,887 square feet and was originally offered without upgrades as a 6 bedroom, 3 bath home with a 2 car garage. Like models B and D above, the model F is a model E alternate plan offering a different combination of options by using the tandem garage space.

The information contained herein is deemed reliable, but must be independently verified.

Other Interesting and Informative Websites

OC Property Management & Sales, Inc.

DRE Lic # 01886215

www.OCPropMgmt.com

OCPropertyMgmt@gmail.com

voice: 949-505-3838

fax: 866-764-6325