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Why You Don’t Need to Do Repairs on a Short Sale House

Why You Don’t Need to Do Repairs on a Short Sale House

Why You Don’t Need to Do Repairs on a Short Sale House 150 150 The Law Office of Nadia K. Kilburn

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Home repairs can be overwhelming and never-ending. As soon as you repair one thing, something else breaks.

It’s difficult to keep up with repairs, especially if repairs haven’t been made consistently. The more time that lapses between repairs, the more expensive and time consuming the repairs become – especially if the property is older and has been accumulating issues for years.

And if you’re in default on your mortgage and you owe more than the home is worth, repairs are probably the last thing on your mind.

However, there is some good news.

If your home is underwater, you can complete a short sale without doing any repairs or spending any money on the home.

You can sell your home on the market for less than you owe and get your remaining deficiency balance waived by the bank.

Five reasons not to do repairs on a short sale home

  1. Repairing the home doesn’t increase any financial benefit to you.
  2. The purpose of a short sale is to sell your home and pay the bank short, meaning, the bank does NOT recoup all of the money you owe. Because the bank is agreeing to take a hit and waive any remaining balance, you don’t get any money at closing. (Unless you get a short sale incentive).
  3. Banks expect you to sell your home in “as-is” condition.
  4. When the lender is offered a short sale option as an alternative to foreclosure, they expect the property to be in as-is condition because they know you can’t afford the home and they know the mortgage is in default.
  5. All short sales are reviewed in as-is condition – meaning – the bank determines the value of the home in exactly the condition the home is in.
  6. It doesn’t help your chances of getting approval on the short sale.
  7. The qualifying factors to help you get short sale approval have nothing to do with the condition of the home.The bank cares that you are experiencing genuine financial hardship and they care that they receive a fair market value for the property.
  8. Repairing the home will not change how the bank views you or help you gain their favor. Short sales are approved based on guidelines that have nothing to do with the condition of the home.
  9. Your agent will help you get an offer at fair market value.
  10. Needed repairs get taken into account when your agent lists the home. Repair issues are disclosed and buyers will make an offer with the repair issues in mind. These repair issues then get explained to the bank as part of the short sale process (assuming you have a good negotiator!).
  11. All the bank cares about is recouping a short sale offer that reflects fair market value.Since you’re not getting any money back from the short sale (because you’re underwater), it shouldn’t matter to you how much your home sells for. Buyers will make a fair offer for the home based on the condition it’s in.
  12. You need to save your money to help you move.
  13. Since repairs are not needed for short sales, take all the money you’re making and save it to help with moving expenses and rental expenses when you enter your new home. Don’t throw money at a bad investment (an underwater home). Save it and put it to good use.

Watch out for bad advice from inexperienced real estate agents

I recently spoke with a woman who received some bad advice from an inexperienced real estate agent.

The agent, having never worked on short sales before, treated the sale as if it was a traditional sale. He did not understand that the borrower was not going to be receiving any funds at the end of the transaction.

The agent advised the woman to replace all the carpet in the home and pay for new windows to be installed on the bottom floor. The woman spent over $10,000 repairing the home because she (and her agent) didn’t understand that this wasn’t needed.

This was money that she could have saved for other things.

The lesson here is that, finding the right person to evaluate your home, tell you whether you have a short sale or an equity sale and then advise on whether you should repair the home is a key step in deciding what you want to do.

If you’re trying to figure out where you fall regarding short sales, equity sales, and home repairs, do the following:

  • Schedule a consultation with a mortgage relief attorney who can tell you whether your home is underwater or not. If the home is underwater, they will tell you that you are in short sale territory. Get their help on the short sale negotiation.
  • Find an agent that works frequently with distressed properties so you have an experienced agent to partner with – the agent will come to the home and view any potential repair issues to confirm you do not need to make repairs.

If you need any help from me, please give me a call: 425-654-1674

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