Short Sale

[undecided]

After we had a signed contract with the seller and had obtained the inspections, it suddenly became a short sale so the October 30th closing date has been ignored. Our real estate agent has been great, but he's never done a short sale before. The listing agent has been superceded by the short-sale expert agent who is acting for the bank holding the mortgage.

 

This is an all-cash offer, so I don't have a loan officer or broker to guide me. My questions:

 

1) I'm told that it could be 4 months before the bank gives the OK (assuming they do). When should I contact a homeowners insurance company? I can't use my current company because the new house (which will be my primary residence) is in another state where my insurance company is not licensed. Should I just contact the company which presently insures the house?

 

2) No lender, so no appraisal. How does the insurance company figure out how much to insure the house for? The sales price? The assessed value? Do they come out and inspect it and figure out how much it would cost to rebuild? (That's another reason I'm thinking of keeping the same company.)

 

3) The signed sales contract has been submitted to the bank, and they've asked for (and been sent) proof that I have the cash available. Lousy timing -- the next day the money market account dropped its interest rate considerably so ordinarily I'd be moving my money around to get higher interest. Will the bank ask again before closing for proof that the money is still available? Will they freak out if it has moved around in the interim?

 

4) We already have a preliminary title report from the in-town title company/escrow agent chosen by the seller (or his listing agent). Escrow is being transferred to the bank's preferred escrow agent in a big city about 50 miles away and in a different county. If it takes another 4 months to close, would the new title company/escrow agent run another title search? Or would they just go with the old one as they are so far away and the old company is an affiliate?

 

Thanks for any help you can give.

[Brian B The Loan Professor]

After we had a signed contract with the seller and had obtained the inspections, it suddenly became a short sale so the October 30th closing date has been ignored. Our real estate agent has been great, but he's never done a short sale before. The listing agent has been superceded by the short-sale expert agent who is acting for the bank holding the mortgage.

 

This is an all-cash offer, so I don't have a loan officer or broker to guide me. My questions:

 

1) I'm told that it could be 4 months before the bank gives the OK (assuming they do). When should I contact a homeowners insurance company? I can't use my current company because the new house (which will be my primary residence) is in another state where my insurance company is not licensed. Should I just contact the company which presently insures the house? You will not need insurance in place until the day you take ownership You should be able to call any national insurer

 

2) No lender, so no appraisal. How does the insurance company figure out how much to insure the house for? The sales price? The assessed value? Do they come out and inspect it and figure out how much it would cost to rebuild? (That's another reason I'm thinking of keeping the same company.) I would pay the money and get an appraisal you dont want to over pay

 

3) The signed sales contract has been submitted to the bank, and they've asked for (and been sent) proof that I have the cash available. Lousy timing -- the next day the money market account dropped its interest rate considerably so ordinarily I'd be moving my money around to get higher interest. Will the bank ask again before closing for proof that the money is still available? Will they freak out if it has moved around in the interim? Just keep documents in case they ask again they shouldnt care

 

4) We already have a preliminary title report from the in-town title company/escrow agent chosen by the seller (or his listing agent). Escrow is being transferred to the bank's preferred escrow agent in a big city about 50 miles away and in a different county. If it takes another 4 months to close, would the new title company/escrow agent run another title search? Or would they just go with the old one as they are so far away and the old company is an affiliate?

 

Thanks for any help you can give.

 

 

Good Luck I would ask the title on #4

Short sales are long and slow

B

[Fallon]

Re the home insurance: Most companies I know of will do their own replacement cost estimate, using the Marshall & Swift software (http://www.marshallswift.com/). An appraisal giving you market value won't mean anything if you're insuring the home for replacement cost (which you should).