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WWYD re: short sale disaster
So we found a home we like. It went on the market last October and was off the market in 3 days. It's in a very sought after area with a large lot, which is rare in my city. It's a short sale with an original anticipated close date of April 15, 2012. Even though it was off the market I kept my eye on it and lo and behold, it came back on the market last week. Unfortunately, the price was up 70K from the October list price, which looked very odd considering how much of a decline our market has been on, even since last year. Turns out the previous buyers walked. My realtor called their realtor and learned several things:
1. The bank set the price at the current list price, period
2. The home has 90K in liens that they want the buyer to pay since the seller has refused.
3. The sellers are going through a divorce and are threatening to just file bankruptcy.
Most people would run from this house and run fast. But we love it. The bank's price is about 70K more than the current comps, but these are very recent comps, as in two weeks old. Before that, the only two comps were from last year and one was the exact price the bank set. Perhaps the bank didn't have the benefit of these comps.
My realtor is very well versed in short sales and has handled hundreds of short sales as a seller's agent. She is skeptical, but said we could go in with the October offer in a few weeks (give it time to sit to show the bank that it isn't moving at the current price) and provide them copies of the recent comps. I also considered offering to pay for and conduct an independent appraisal.
We also want to urge the sellers to get an attorney who specializes in short sales. It sounds like their realtor has minimal experience and could really use the help of someone knowledgeable on their side who could push this through. It's a very cheap expense in the grand scheme of things. We are both attorneys and we are both very familiar with the short sale process. We could definitely recommend a list of attorneys who could help push this through.
We've been looking for two years and we've found a total of 3 or 4 houses we love, tops. This is the first one that both DH and I totally agree on. We have tons of time, our house sold and we are renting from a friend while we find something. In fact, we were hoping to buy in July at the earliest just because that would work best for us timewise.
Should we give it a shot or is this too much drama? Why can't it just be easy?!?! I know short sales are already a headache, is it worth jumping into even more of a mess?
Re: WWYD re: short sale disaster
No way in hell we would either. We would pay the sales price (which we feel should be lower than the list price), period. The liens would need to be absorbed by the bank. The fact is, if these people let it go into foreclosure and file bankruptcy (which they will do if a short sale doesn't go through), the bank won't get that lien money anyway. Not to mention the fact that the bank would be stuck listing it and starting from square one. It makes no sense that they wouldn't agree to the short sale considering those circumstances.
I guess I'm just looking to see if anyone else who has dealt with short sales has had something like this happen (bank sets certain requirements and won't budge). I'm wondering if it's an issue with their realtor not having a clue as opposed to an issue with the bank.
If you think you can keep a cool head, then why not give it a shot? I would set a hard max offer price and stick to it. I would also prepare for a lot of anxiety during the process.
I feel like getting the house is just the beginning and you'll still have to get through the inspections which might be equally trying. The sellers don't sound terribly cooperative and it wouldn't surprise me if there were inspection issues.
In all honesty, this isn't even a consideration for us. Maybe where you live it's possible to "run far and fast" from short sales, but where I live I'd say 1 in 3 houses in a short sale, and most of the rest are either destroyed foreclosures or regular sales with prices far in excess of the market value. There's no way I can refuse to consider short sales, period. This short sale just seems like a big headache. I'm quite familiar with the short sale process from a legal perspective and I've never heard of a situation this tricky. That's what worries me most--the details of this particular sale, not the fact that it's a short sale.
I'll cross my fingers something can work out for you - that is a beautiful area. My sister in law lives in the estates portion and it is posh. So nice!
First of all, you will not be liable for their liens. Definitely no to that and there is not a Lender who would allow that (maybe you mean the liens are being paid off through the sale price or forgiven through the short sale?? Little confused). Second, the comps set the value of the home and the loan you get is based on the appraisal. If the home doesn't appraise then you would have to come in with the difference or they will have to come down in the sale price.
So definitely give it a shot but don't pay more for it then what it's worth!!
We live in LV too and it is SO hard to find a house that isn't a short sale. We are about 60 days into the process on our own. It easy for other areas of the country to say "run from a short sale" when 45% of the houses on the market here are short sales. That being said, I think that I would run from this short sale. There are SO many short sales out there right now, beautiful homes. We were very picky in our criteria and found a great house in Henderson where we work, If you happen to live/work in the NW part, there are some absoultley amazing home up there right now! GL!
Thanks everyone. Ultimately we decided to keep looking, this was just too much of a headache for us. It's hard for me because I get so excited when I find something that I like that I want to buy it NOW and DH is much more calm and much less impulsive. I've noticed if I sit and wait and really think things through I will usually realize when the bad outweighs the good.
Margaux--my friends just sold their house in the Estates. It's beautiful there!