Talk to me about "Short Sales"

PlumCallaLily

L and I want to upgrade in a year or two, but with the low interest rates now, we have been pursuing websites just to see what's out there.  I found this awesome house that's a short sale.  I looked up "short sale" and I get what it is, but what does it really mean?  For example, would the bank accept less money, or is the listed price the price that would have to be paid?

aleesh19

It all depends on how much the owner is under water. We tried to get anshort sale before the wedding and it ended up us being in limbo for 4 months. We offered the listing price and one bank accepted but the other didn't without the owners saying they would pay the difference (which they couldn't do). There have been friends of ours that have successfully bought short sales but it is usually a long PIA process.

PlumCallaLily

hmmmmmm.  So basically, the bank and the sellers have to agree on the price and since the seller can't pay what they owe on it, they more than likely won't accept less than the list price, correct?  The list price on this particular house is still affordable, it would just be nice to get a sweet deal.  We aren't in a hurry to move or sell, so waiting wouldn't be horrible, although it would probably drive me nuts!

Now_a_Swearingen

Its a hit or miss kind of thing. But I've just heard the wait is a giant PITA and overall process is as well.

FutureMrsNAH

The house I think we want to upgrade is a SS too and I've been scared to go further because of the PITA I've heard the process to be.

Jackie's current house was a SS I believe and I remember her talking about the wait/limbo, etc.

lolabright

I was advised to avoid them at all costs, because you end up waiting for the banks to approve the offer and it can take months for it to be done. Then if they don't approve it you lost those months looking for another house.

SSM&JLM

A short sale is where the bank has agreed to sell the price for the balance of the loan basically.  Sometimes they will sell for less, but the owners will have to pay the difference or if its forgiven, they will have to show it on their taxes.

The condo my parents bought down here by us, was a SS and a relatively quick process, in terms of SS.  They offered X price, then the bank did an appraisal and came back $1k more, which they agreed to.  Then there were some other issues after inspection, which the owner ended up paying OOP to avoid problems with the purchase price.

I think it took about 75 days from offer to closing.

Rebekistan

If you want a sweet deal, and you're not wedded to moving until next year, it sounds to me like you're in the perfect position to try for a SS. The wait is long, but if you're not in a hurry then that's the "price" you pay for a lower price. Talk to a realtor about what to offer on it and maybe, if you offer below asking, the bank will agree. If not, it's not like you've already sold your house and you need to move asap. Go for it! You're going to help someone get out of a bad situation and get a good deal in the process.

PlumCallaLily

Thanks for all of the info guys!

It sounds like it could take a while but since we aren't desperate to move, waiting for a SS might be an option!  Does anyone know if there's an option once we make the original offer to back out if it takes too long, or if we find something else?  Just doing initial research! We would, of course, consult a Realtor and/or lender before we did anything.

I'm going to drive by it tonight.  It totally looks like it's worth a view and the area it's in is really good (brand new schools).  It doesn't give a lot size though, so that concerns me.

WildcatPrincess

Like others have said it can be a long process. I don't know why the seller is allowed to pick a price and THEN have the bank approve it after someone makes the offer. It can take months to get a response back and sometimes the bank will say no, that's too low and you have to start all over. The other thing our agent pointed out to think about is short sales mean the seller couldn't afford the house anymore, which means they likely couldn't afford maintenance or repairs. A lot of times the houses are sold as is with no opportunity to negotiate anything be fixed before closing. To some people that's not a big deal, but we're looking for a place we can move into without having to fix stuff up right from the start.

lolabright

WildcatPrincess:

Like others have said it can be a long process. I don't know why the seller is allowed to pick a price and THEN have the bank approve it after someone makes the offer. It can take months to get a response back and sometimes the bank will say no, that's too low and you have to start all over. The other thing our agent pointed out to think about is short sales mean the seller couldn't afford the house anymore, which means they likely couldn't afford maintenance or repairs. A lot of times the houses are sold as is with no opportunity to negotiate anything be fixed before closing. To some people that's not a big deal, but we're looking for a place we can move into without having to fix stuff up right from the start.

Very good point. We are also looking for a house that we can just move into and do upgrades on later.