Lowball / Short Sale Strategies (lawyer, lender, real estate)

[Hero]

Originally Posted by Muggy

Has anyone successfully negotiated a short sale or lowball offer? I'm going to start tossing offers at 50 cents on the dollar. I don't really care if I upset people or not, I just want the best approach.

Sellers:
Sellers are still in denial. Those who aren't have already sold their homes. If you want "bottom out" prices, you will have to lowball or you will have to wait. Why not do both? I'd have my agent tell the seller's agent: "I have a buyer with great financing. He's looking for this price. Should you want a basically guaranteed sell, let me know." Do that for several properties that you want to buy and wait knowing that every 6 months, it will likely be a different market.

Banks:
50 cents on the dollar you can try but remember to keep on trying. I hear people offering a price, get rejected by the bank, and find out a few months later that the house sold for a lower price.

[Mike Peterson]

Originally Posted by pip349

You are the poster child for the delusions that are rampant in Florida. Prices have to drop 50% to be in line with fundamentals. It may take 2 years, or 5 years, no one knows. But it will most certainly happen.

It is blanket statements like this that show how delusional some people are in regards to the market.

There are some markets that did not go up near as much as other markets whether it be within the same state or not.

There are many markets that a 50% drop would price a home way under the cost of the materials to actually build the house let alone have a lot to build it on.

If you want to have a rational discussion I am more than willing but with a statement like yours it just shows that you don't really know what is going on no matter how much you would like to believe it yourself.

[trunky9]

Originally Posted by Mike Peterson

It is blanket statements like this that show how delusional some people are in regards to the market.

There are some markets that did not go up near as much as other markets whether it be within the same state or not.

There are many markets that a 50% drop would price a home way under the cost of the materials to actually build the house let alone have a lot to build it on.

If you want to have a rational discussion I am more than willing but with a statement like yours it just shows that you don't really know what is going on no matter how much you would like to believe it yourself.

Existing houses can fall below the cost to build them, it happened in Japan. When inventory is super high and non housing expenses are skyrocketing, existing houses can and do fall below material costs. They are used commodities, competing with new houses. The owner has to take what they can get in the market, the actually cost of materials is no longer relevant. The materials depreciate rapidly in a housing crash. And many lots have little to no value in reality. For years in many parts of Florida land was so cheap it barely even factored into the equation of a house. Pt. St. Lucie for example, where I have 35 years experience, lots were $1000-2000 for decades.

[AJ1972]

Go for it! Low ball. You wouldn't insult ME, and my house is up for sale for almost 3 months now. If someone offered me a lot less than my price, I just wouldn't sell it, but I wouldn't get annoyed. I am too busy in my day to really care what anyone else thinkks my home should be worth. Besides, I doubt it's what they think its worth anyway...I think they're just trying to get it as cheap as possible. Either you'll get it or you won't! Try it!

Good luck. Hope it works for you. I know we're in the market for a home too, once this one sells....and prices come down.

[cflfan]

I hope i can offer some helpful advice without being shot down as usual by people who say ALL realtors are looking after their own interests and dont care about anyone but themselves, some of those people and you know who you are who contribute to most of the threads including this one. To start with a Short sale typically isnt deal with by the banks. A short sale is still controlled by the Sellers. The only difference being, a seller may have bought a home for $400,000 when the market was at its peak. They financed the whole amount, and in the current market it may only be worth $300,000. In this instance the sale would not pay off their mortgage by a large sum. So they speak to their lender and negotiate an amount a lender would accept to satisfy the loan knowing that currently the property wouldnt sell for the full loan amount. The amount that is the difference, in the loan and the value which the lender will accept is known as the short and the lender will write this amount off. So if you go and put an offer which is alot less than the listed price on a short sale, you are unlikely to be successful. Now foreclosures in the past have been typical different. You could put in a stupid offer with a chance in securing a property, simply because lenders dont want to have a huge inventory of homes which are doing nothing for them. However, in my experience in the current market, you will find that on the whole, lenders wont let the properties go for crazy , prices, whether you agree or disagree, its the way it is. If you have been lucky to get a STEAL, and i do mean a STEAL, then good for you and im very happy for you.
Dealing with short sales is hard work, typically there is alot of work involved and waiting for lenders to get back can take time. If your one of the know it all's which we see alot on here who think that Realtors are all bad blah blah blah, then i would strongly recommend negotiating yourself and doing all the paper work yourself. You obviously have strong feelings about ALL of us and no amount of common sense, or friendy chat will change your opinion. If you dont feel confident etc, then use a realtor. It takes all the hard work out of it and it doesnt cost you a thing.

[trunky9]

Originally Posted by cflfan

I hope i can offer some helpful advice without being shot down as usual by people who say ALL realtors are looking after their own interests and dont care about anyone but themselves, some of those people and you know who you are who contribute to most of the threads including this one. To start with a Short sale typically isnt deal with by the banks. A short sale is still controlled by the Sellers. The only difference being, a seller may have bought a home for $400,000 when the market was at its peak. They financed the whole amount, and in the current market it may only be worth $300,000. In this instance the sale would not pay off their mortgage by a large sum. So they speak to their lender and negotiate an amount a lender would accept to satisfy the loan knowing that currently the property wouldnt sell for the full loan amount. The amount that is the difference, in the loan and the value which the lender will accept is known as the short and the lender will write this amount off. So if you go and put an offer which is alot less than the listed price on a short sale, you are unlikely to be successful. Now foreclosures in the past have been typical different. You could put in a stupid offer with a chance in securing a property, simply because lenders dont want to have a huge inventory of homes which are doing nothing for them. However, in my experience in the current market, you will find that on the whole, lenders wont let the properties go for crazy , prices, whether you agree or disagree, its the way it is. If you have been lucky to get a STEAL, and i do mean a STEAL, then good for you and im very happy for you.
Dealing with short sales is hard work, typically there is alot of work involved and waiting for lenders to get back can take time. If your one of the know it all's which we see alot on here who think that Realtors are all bad blah blah blah, then i would strongly recommend negotiating yourself and doing all the paper work yourself. You obviously have strong feelings about ALL of us and no amount of common sense, or friendy chat will change your opinion. If you dont feel confident etc, then use a realtor. It takes all the hard work out of it and it doesnt cost you a thing.

No offense to all realtors but they have let a lot of people down the last 5 years. Anyway, I agree that lenders are not giving away things...yet. But in my opinion we are still very early in this crash. I think the price declines will be gradual but unrelenting over the next 2-3 years. In the end many houses will sell at a 50% discount on todays pricing. Remember inflation is running high so the actual decreases have to factor that in also.

[hiknapster]

Wow.

Listening to these sellers I can see that it is like the five stages of death.

First we had denial.

Clearly, we now have anger.

Next up: Bargaining. Depression. Denial.

We are moving on.

[cflfan]

I do love your insights hik. In all honest your one of the few people i have met on here who i find friendly but likes a good debate. I responded to your other post on another thread by the way.

You know, i have had this debate with many who have been very rude and insulting to me, and i cant lie to you. You are absolutly right. There have been Realtors out their who have completely screwed their customers and i am ashamed to be in the same profession as them. I love my job. I love helping people. And it does annoy me that there are alot of realtors out their who give the decent ones a bad name.

I firmly believe the market is going to level out and then begin moving back up in 6-12 months time. I have been called many things for this opinion, told i am trying to screw people blah blah blah.....lol

I honestly, frimly believe this, and the reason i do is simply because of my place in the market and what i see. I am actually going to start a new thread where i am going to post a link to an article i came across today. What i would dearly love is for people to post on the thread their opinions, being honest and backing up their belief. However, for people who want to make sweeping statements and personal attacks, then i would ask them to go elsewhere. I love a good friendly debate, but leave the personal attacks at the door.

Thanks for the nice friendly reply trunky, it was actually refreshing from the replies we as realtors usually get on here...lol

Have a good one

[SKB]

Originally Posted by Muggy

Has anyone successfully negotiated a short sale or lowball offer? I'm going to start tossing offers at 50 cents on the dollar. I don't really care if I upset people or not, I just want the best approach.

I think you are to early in the game and would be better off renting this out for the next two years.

When that time comes you may find the 50 cents on the dollar may be to much for certain areas.

I know I am tracking things very closely and in my zip, 33411 and have a long long way to go yet. I firmly believe my zip will see a 50% decline from peak 2005 prices (meaning we are going back to the median home being priced at 2.5 to 3 times the median income.

It is like a 1,000 christmases and I am five years old, when I think of how I feel about the prices going back to where they were pre- bubble...
back to a normal HEALTHY market. It is so wonderful for so many people, first time buyers, young people, immigrants, middle class.

This doesn't mean people will be "giving their homes away". It means they will be selling them for what they would have been worth and sold for if the credit bubble had not happened.
Easy come easy go, I don't understand why that idea is so upsetting to people?
I mean, it was ONLY paper wealth, unless of course you used your home as a VISA card and took cash advances out....all bets are off for those ones as they are SCREWED and shouldn't have gambled like that.

[Hero]

I keep hearing people talk about "peak 2005 prices." From the charts on zillow, it looks to me that the peak price was actually around 2006-2007 at around 250K. "Peak 2005" would be about 200k. Houses that I see selling are around 2004/2005 price at 150-200k.

Am I missing something here? Like the zestimates, are the charts unreliable too? Should I use something else? Thanks