Short Sales

LuckyladyJ · August 2011

Whats the story on short sales? has anyone ever bought one? how long did it take what's the entire process like? Please provide any info you can.

Desmond&MollyJones* · August 2011

I bought one last July. By the time we put the offer in, the short sale process had already been started. From the time our offer was accepted by the seller to the time we closed, it was 2 months.

mbcdefg · August 2011

We found one back in January that we liked and we made our offer. We backed out of the deal in July.

It was held up for six months because the current owner had declared bankruptcy, and the house can't be a part of that claim so it needed to be cleared. Then the owner had to sit through FHA hearings because he had bought the house with an FHA loan and that held things up. Then I think the bank just never really got around to processing our paperwork.

Our realtor said that we had really run into the "worst-case scenario." Meanwhile, our friends found a short sale they liked, and were moved in within 90 days of making their offer. So it's really a crapshoot sometimes. I personally would not pursue one unless you have all the time and patience in the world, and if the house is really worth it. We backed out partially because we were tired of waiting, but mainly because we had begun to look at some other (non-short sale) houses in the meantime and we realized that we could do a LOT better than the short sale place. We felt that waiting around for 6+ months for a place that was just "meh" was absolutely not worth it.

steph44w1 · August 2011

Here are some things you should know when considering purchasing a short sale.Short sales take time. Negotiating a short sale might only take a month but in most cases it can go 90 days or longer. So don't hire a mover, end your lease or lock your rate until you have confirmation that your offer is approved by the bank. If the seller accepts your offer that isn't an approved short sale; any offer the seller accepts still requires approval from their lender.You are buying the house "as is.? In rare cases, such as in an environmental problem, the lender will pay for repairs but most if the time you are getting the house as is, just like a bank owned foreclosure. The seller is in hardship, so they won't be able to help. As with any purchase, I recommend getting inspections and know what you are getting into before going forward.Status updates take longer. Unlike regular transactions where updates are a phone call away, all parties are at the mercy of the lender who doesn?t care that you are waiting. More patience is required than normal. Because of confidentiality the lender will speak ONLY with the borrower or an authorized party about the mortgage being worked out.Subordinate financing takes longer. If the seller has a second mortgage, then two lenders have to render their approval, and coordinating the two complicates matters.Ironically, you have to be ready to close quickly. The lender will make you wait far longer than a normal purchase for a decision, but when that decision is issued there will typically be a 15 or 30-day deadline to close or the sale approval has to go back to review or a monetary fine is sometimes imposed on you. Do not wait until approval to process your mortgage.You WILL get clear title. In an approved short sale, none of the seller's back taxes, unpaid dues, or other issues convey to you. The lender will release all liens. That may not mean that a non-conforming bathroom shed or finished basement is compliant, but financially the title is whole.You probably can't "steal" the house. Once the seller's hardship package is approved, the bank will order a BPO (broker price opinion) or appraisal to ensure that the sale price is in line with market conditions. You might get a house for 8 or 9% less than market, but they are seldom steals.The lender may counter your offer. The house may appraise considerably higher than your offer, or your offer may be too unrealistic. If the bank counters you, look on the bright side: the finish line is in sight! If the counter isn't to your liking, the smart move is to counter back. Negotiate. If the seller chose your offer to submit to the lender over the others, you should operate in the same good faith and negotiate. The lender may still come down some.No two short sale transactions are the same, even with the same lender. It helps to have an attorney with short sale experience represent you in your purchase, but at the very least make sure they are experienced at real estate.

Ajoyd · August 2011

Steph's post is awesome so I will only add a few thoughts from my recent short sale experience.

My fiance is extremely skilled at home improvements so we bought a short sale that needs a lot of work. Therefore we did actually get a very good deal on it despite all the crying around about it from Bank of America.

We put in our initial offer sometime in March. We closed on July 22. You MUST be willing to be very patient. It can go quickly but it can also get drawn out. We were given an initial closing date of June 15 but then there was some push back from the seller's bank and the process took another month. We were getting ready to walk away.

If there has been no recent inspection of the home, DEFINITELY get one. In addition to a regular home inspection we also got a sewer lateral and termite inspection. You can never be too careful.

For us, the process was definitely worth it in the end!

Desmond&MollyJones* · August 2011

I guess I will add a few things:

We got ours for 13% under the appraisal. The seller had to bring $5,000 to closing to give to the bank.

We closed about 40 days after we got approval. There was not a huge rush.

LuckyladyJ · August 2011

steph44w1:
Here are some things you should know when considering purchasing a short sale.Short sales take time. Negotiating a short sale might only take a month but in most cases it can go 90 days or longer. So don't hire a mover, end your lease or lock your rate until you have confirmation that your offer is approved by the bank. If the seller accepts your offer that isn't an approved short sale; any offer the seller accepts still requires approval from their lender.You are buying the house "as is.? In rare cases, such as in an environmental problem, the lender will pay for repairs but most if the time you are getting the house as is, just like a bank owned foreclosure. The seller is in hardship, so they won't be able to help. As with any purchase, I recommend getting inspections and know what you are getting into before going forward.Status updates take longer. Unlike regular transactions where updates are a phone call away, all parties are at the mercy of the lender who doesn?t care that you are waiting. More patience is required than normal. Because of confidentiality the lender will speak ONLY with the borrower or an authorized party about the mortgage being worked out.Subordinate financing takes longer. If the seller has a second mortgage, then two lenders have to render their approval, and coordinating the two complicates matters.Ironically, you have to be ready to close quickly. The lender will make you wait far longer than a normal purchase for a decision, but when that decision is issued there will typically be a 15 or 30-day deadline to close or the sale approval has to go back to review or a monetary fine is sometimes imposed on you. Do not wait until approval to process your mortgage.You WILL get clear title. In an approved short sale, none of the seller's back taxes, unpaid dues, or other issues convey to you. The lender will release all liens. That may not mean that a non-conforming bathroom shed or finished basement is compliant, but financially the title is whole.You probably can't "steal" the house. Once the seller's hardship package is approved, the bank will order a BPO (broker price opinion) or appraisal to ensure that the sale price is in line with market conditions. You might get a house for 8 or 9% less than market, but they are seldom steals.The lender may counter your offer. The house may appraise considerably higher than your offer, or your offer may be too unrealistic. If the bank counters you, look on the bright side: the finish line is in sight! If the counter isn't to your liking, the smart move is to counter back. Negotiate. If the seller chose your offer to submit to the lender over the others, you should operate in the same good faith and negotiate. The lender may still come down some.No two short sale transactions are the same, even with the same lender. It helps to have an attorney with short sale experience represent you in your purchase, but at the very least make sure they are experienced at real estate.

Thank you for this info. I currently have an offer on an "Approved" short sale since May. I thought Approved short sales moved quickly but whatever..I am getting a little antsy & honestly thinking about walking. There are so many other homes out there right now . I just don't want a good deal to pass me by.

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