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short sale question
We put an offer in for a short sale condo this weekend. Before we did, our buyer's agent spoke to the seller's agent, who said that the owners haven't been paying their mortgage for a few months and the bank is most likely going to start the foreclosure process soon. Can the bank start foreclosing on the condo even while they are sitting on our offer?
Also, we know that the owners have been paying utilities but I'm not sure if they've been paying the condo fees for the past few months. If we do get the condo and find out that they haven't been paying, could this be a problem for us with the condo association?
We're not getting our hopes up high since we've heard so many horror stories about short sales, but I'm trying to get as much information as I can in case things do work out.
Re: short sale question
If the bank has not accepted your offer, they can and will continue the foreclosure process. DH has bought several properties at auction while there is a short sale offer on the table with the bank.
If the current owners owe condo fees, the association can also put a lien on the condo and do a condo lien sale to recoup fees. The bank would then have to clear the lien before they can sell the condo.
The foreclosure process is a long process from point that they are delinquent enough to even begin the process to selling a foreclosure. I have seen the banks begin the foreclosure process but postpone the sale, eviction, etc for a reasonable amount of time as long as there is an active short sale being worked. May not always happen, but happens plenty.
Also, hopefully the listing agent has been in contract with the condo association to find out what amount, if any, is delinquent. Then they will submit those fees on the preHUD that is sent to the short sale bank with your offer and hopefully, the bank will pay those fees too.
May times the bank will pay for all or a portion of the condo dues. Your agent should make sure of it. If the owners were paying their mortgage, the bank would never accept your short sale. Why would they when their getting paid. Short sales can be a way to get a good deal on a house but they take a long time to close if ever and most of the time the home is rather beat up.
Edited by moderator. Against TOS.
This happened to us. We had put in an offer and meanwhile the home went into foreclosure (and the owner didn't tell the agent what was going on). We ended up walking away because of needing to move out of our apartment at a certain time and didn't want to wait for the three banks to come to an agreement. If you're not in a time crunch I'd go for it if you really like the house!
I'm not sure what to say about the condo fees...could you contact someone at the condo association and see what they can tell you?
KEEP YOUR HOPES UP!!
I am a Real Estate Paralegal and yes there are many horror stories and many fees that a buyer in a normal sale wouldn't have to pay for, i.e. CO, Any repairs (as houses are sold as is), etc.
BUT
my fiance and I put an offer in on a short sale thinking it was a long shot. The house is not in bad shape and mortgage payments would be the same as our rent payment right now. We assumed it would be a while but we signed the contract at the end of January and we already have approval as of last week and we are suppose to close March 16th!! Sometimes they do work out the "short" way they are suppose to. In our case, they had had some offers in before ours and they were rejected so the paperwork is still current and the bank wants to get rid of it asap so they don't have to pay for anymore.
Most important.. make sure you trust your Realtor and your mortgage rep. They will make the whole processes less painful if you trust them and shop around before you settle on a mortgage commitment or anything. Some places charge renewal fees for commitments, so make sure to ask about this, especially with short sale.
Good Luck :-) Still hoping ours works out the way it "seems" to be!
p.s. I know people already answered but most likely the bank will not foreclose before your offer is rejected or accepted as foreclosure process takes even longer. And condo fees.. SHOULD be paid by seller. If worse comes to worse, sometimes buyers offer to pay it at the closing table if it will be the only thing holding up the sale.