Costco or 7-Eleven? Can closing fast cost you money?

Many of the homes that are being financed for purchase today are either short sales or they are foreclosures. On the Short Sales in particular you may wait up to six months to get the approval to sell the property as the offer was submitted.  The approval can initially be a verbal approval with the executed contract to follow.

The Good News: You are in contract to buy the home that you wanted.

The Bad News: You have thirty days to close from the initial acceptance and your Loan officer will not get the contract for up to a week. This will give you 20-25 Calender days to close.

The Choice: Due to the limited time that you have been given to meet the contractual terms of the agreement you have been placed in a position to have to choose whether or not this home is worth the Price.

After six months of negotiating an accepted short sale contract and waiting patiently as a buyer to hear the news you now have to decide immediately.

Point to Ponder: If you are in a hurry and you need milk fast do you:

A. Go to Costco

B. Go to 7-Eleven

Second Point to Ponder: Which one of the two costs more for the convenience?

A. Costco

B. 7-Eleven

If you answered 7-Eleven both times you are correct. As a consumer trying to meet the contractual obligation of the short sale terms you have been forced to go to a store that is fast and efficient rather than the store that you may get twice the amount for your dollar. Costco on Saturday Morning is not the fastest place on the planet to get in and out of. You may have to wait in line. Of course we are happy to do so because of the bang for our buck.

Going to 7-Eleven costs you more but because you are eager to get in the home and meet the contract you have chosen to sacrifice your overall well being to meet the standards of the same person that took six months to make a decision. You may be saying about now: Is this fair? My answer is simple Absolutely Not! The worst part is even if 7-Eleven is not fast enough they have the nerve to charge you for making them wait.

In conclusion, I certainly know that not all is fair in love and war. I also now that as a consumer we have the right to choose whether or not we want to accept the terms of the contract. However, it is the same Costco approving the short sale that is saying 20 days should be sufficient to close this escrow so I just don’t care.

Can you get in and out of Costco on Saturday in 30 minutes or less including parking, shopping, purchasing and exiting the lot?

*7-eleven costs more most of the time. This is not always the case. Wholesalers hedge markets. When they do so they may be competitive for the moment but then they are subject to creating Costco like lines. Managing their offered rates help to control the lines. Therefore to keep turn times down rates may increase to decrease the traffic and vice versa.

Foreclosures and Short Sales: “How to” remain Sane while waiting.

The market has brought us a unique opportunity to purchase Real Estate at a low price and low interest rates. This is an exciting time for a buyer to capitalize on buying not only a great home but also simultaneously make a prudent investment. Then what is the problem you may ask? With opportunity there will always be a challenge. The challenge that we face with the purchase of REO’s and Short Sales is the lack of a communicated answer. As Real Estate agents and Loan Officers we are waiting on answers from the banks themselves to see if they will agree to the conditions of our offer. They are waiting on answers themselves from the decision makers. This can be a frustrating process for the consumer because you are anxious to know if the house is yours.

Here are a few ways to remain sane while waiting on the answers:

1) Write the offer and forget about it – Many times when we make an offer on something we want to know right away whether or not it was accepted. This is not the case for a short sale and an reo. The answer can take days, weeks or months. Look at it as if you have planted a seed for a tree that you would like to grow in your backyard. You would not stand outside everyday staring at the seed waiting for it to grow. You would water it and go back about your business. Every now and again you would check to see how it was going but your expectation for a 1 year gestation was set from the get go.

2) Set realistic expectations for yourself – If you allow your self realistic expectations then you will not experience the let down of waiting for your answer. If you are going on a diet you should not expect to lose all of it in the first week. You set a goal to lose a 1/4 lb. a day and work towards it. When it does not go your way you still continue to implement the daily tasks and you refine the habits. Continue to look at other properties and continue to exercise all of you options. Don’t limit yourself to just this house.

3) Don’t Mentally Move In - This is a sure fire way to set yourself up for failure. If you mentally move in and the answer is “no” it will be very difficult to get up again. Nothing will compare to the house you lost. This is unfair to all the other homes on the market that are dying to have you as a home owner. I know that this is an emotional decision and I am not saying to not be excited but keep your cool until the offer is accepted.

4) 6 Months is not as long as 20 years – You have waited at least 20 years to start this process and many of you much longer. So do not get a head of yourself. Be patient just a little longer and you will reap the reward for at least the next 30 years in most cases. We can always talk about strategies that will help you to pay this off much quicker but for know let’s focus on the 30 years.

5) Do not try to understand the “logic” of the banks – The reasoning of the decisions of the bank one will never understand. They are many components that make up the decision of the banks and we cannot even begin to understand the first one of them. Give yourself a break and know that we will never get what they are doing and they are all in hot water. Decisions made when the wheels are falling off the truck are very difficult.

So just remember the five tips above anytime that you begin to get frustrated with the timeline of your offer. Tome is on your side and your team. Be more patient, more logical, less emotional, more realistic and without attachment more than the other party. We will guide you through the process.

As always thank you for reading,

Matt Freeman