So many short sales end in disaster even when all of the parties have the best intentions and under the best circumstances. A common issue that I have come across is that the bank will often refuse to pay the back taxes or utilities for the property. Another problem with vacant properties is that the Seller after leaving the property refuses to pay for utilities and they are shut off by the providers. . . . Sometimes these issues can be a compete deal breakers. Often times we are just a few thousand dollars short from making such short sales work. . .
Recently I happened upon an unusual set of circumstances that is working so well, I am contemplating that we (Realtors I work with and myself) put this one in the "playbook". In this scenario the Sellers had actually relocated to an apartment. We found a buyer, however, the short sale approval process was heading past the 90 day mark and the Buyer was getting anxious. The Seller was also at the point where they did not want to pay for the utilities any longer (heating season is here!). So, the Buyer indicated that he wanted to rent the property. The way we set the rent up was that the rent would be payable to my office and the Seller agreed that the rent could be used for utilities and to cure any deficiency over the taxes at the time of closing.
This has worked out perfrectly. The rental agreement requires that the tenant pay the utilities. We have used the rental income to bring the utilities current an after an addition al sixty days, we now have an approval. With a few month srent, we also have the money to pay the taxes. . .
Under the right circumstances, rent to short sale can work!
Nyles...I sounds like you came up with a creative solution that everyone can live with, That does appear to be one of our biggest assets in this market - creative ways to hold the deal together.
That is a good way to deal with a few different problems. I think that everyone needs to understand the "rules" of sjort sales before they start playing. I think we need to follow the lead of teh bank owned property contracts: "This is as is -where is; let's come up with a price and agee that the Buyer will pay up to $2000 in taxes and utilities etc. . . so that this can work!
Nyles - I've thought of this - just wondering what happens if the bank ultimately does not approve the short sale!
Well, if you have in fact accepted a fair market offer on the property (read - there is no way you are getting any more money for this house through another offer) and the bank has rejected the short sale, you have at least put the Buyer in a position where they can purchase the property at auction or after the bank buys at their own auction. . .