I have had a few people email me regarding the story of the transaction that started out as a short sale - and closed as a regular sale last week.

How did that happen?  The deal started out as a short sale - the seller owed more on the house then the sales price, thanks in large part to a nearly $10,000 prepayment penalty (more on that later).  With most prepayment penalties, they are typically put on some loans (usually the infamous sub prime variety) to discourage payoffs or refinancing.  Most prepayment penalties are equivilant to 6 months of mortgage interest.  In this case, that prepayment penalty, which Countrywide refused to remove, was the difference between the short sale and a regular conventional sale.  The fact the seller had a unique property on land in what is a lower price range in this area worked in the sellers favor.

Luckily, the seller's two year limit on the prepay was up, so during the course of what turned out to be a 90 day escrow, that was removed.  In the meantime, it was my opinion the seller would be able to sell the property for more than the original price, and in fact given the number of calls I received on this particular property during the escrow period, that the seller was justified in asking for a higher sales price, not to make money, but to eliminate the need to go short sale.  I know this is an unusual situation that would not happen to most properties.

Long story short....the buyers to their credit who hung in there, agreed to a higher price, and with the skills of two very experienced professional Real Estate Brokers, an easygoing seller, and patient buyers, we were able to close what turned out to be a learning experience for all involved.

If you are a buyer reading this, my advice is make sure the loan you get DOES NOT HAVE ANY PREPAYMENT PENALTY attached to it.  Ask your loan officer, and make sure when you are signing loan papers at the closing, that you read the fine print.  I have heard stories of buyers finding out the hard way what they were told and what they signed were two different things.

The other piece of wisdom I want to impart to buyers:  Get preapproved, and you were preapproved already, contact your loan officer again because the financing world is upside down at the moment and loan programs are vanishing; buyers that were qualified a month ago are finding that loan programs are no longer available.  Stated income loans are still there (minimum 20% down and 700+ credit) but going bye-bye.  Stated income, stated asset, gone.  100% financing, going, going...

Thanks for reading my blog.