Buyers Are Looking at My Loan Balance!
One of the market realities I go over with potential sellers in the Orcutt CA, Nipomo CA & Arroyo Grande CA real estate market is the fact that once their home is put on the market, everyone is going to be looking at their loan balance. During the boom, buyers seemed less concerned about what sellers were making - maybe because they expected to make more. But now, even on short sales, buyers want to know what the seller paid and what loans were taken out on the property. Of course, your exact loan balance doesn't show up in public record, that's private information between you and your lender; but in Santa Barbara County and San Luis Obispo County, typically the original loan amount will show up and buyers can and will make a guesstimate from there. That's right, they are looking directly at your loan balance.
Do you feel violated?
This can be a big issue for sellers, especially when what they owe is close to their contemplated list price. Buyers may think that your home sale is a distress sale and believe you are trying to squeeze out of a home that is about to go underwater. Just last year, I had a listing where the seller was contributing funds to avoid a short sale. We hadn't been on the market long before receiving a low offer with a "Short Sale Addendum" attached to it. I guess it was the buyer's nice way of saying "I've seen your loan balance." Unfortunately, her agent had taken the time to look up my client's loan balance, but hadn't bothered to read my agent remarks indicating that "seller to contribute funds to avoid a short sale."
Sellers should also know that real estate agents are required to disclose if a real estate listing is a short sale. This is a current hot legal topic because of course some less-than-forthright real estate agent somewhere didn't disclose it to a set of buyers who sold their home relying on a purchase contract that did not disclose that the sale was a short sale. (Of course, the buyers didn't read the preliminary report which also had the lien information.) And, of course that transaction did not close and I think the buyers were left homeless until they could find a better real estate agent. So, as a home seller, you should also expect that the real estate agents involved in your transaction will be nosing into your loan balance too.
Even on a short sale listing, many times buyers want to know that a significant amount of negative equity is being absorbed with the short sale - of course what you paid and what you owe doesn't tell them that - but they are still going to look. And on REOs, buyers want to see the current tax records for a property too. In fact recently, I had a buyer who wanted me to chart the sold price history for a REO condo since the unit was built in 1978. After reviewing that info, she felt like the 1989 sales price was the price that was fair. Seriously. After she completed her analysis, I asked her if she also wanted to look at the comps. LOL. They just happened to be lower. Thank goodness she had a good agent.
Copyright © 2011 Tni LeBlanc * Buyers Are Looking at My Loan Balance!*
• This blog post offers no legal advice. Nothing in this blog article is intended to solicit listings currently under contract with another broker. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement. Not affiliated with the government. A lender may refuse to change a loan.