What is my risk going into this?

[mortimer]

Originally Posted by Modification Specialist

My 2 cents.....

I'll add 2 and make it 4 ( with on-topic, but not technical advice ).
Reading the back-and-forth advice made me think of the following:

I would live really "lean" and keep heavy books and lightly used furniture in storage.

I might also move winter clothes into that storage also.

Moving is a pain in the best of conditions.

Having to move in a hurry is a HUGE PAIN.

[Yankeerose00]

Thank you all so much for all of the advice!
It's a really hard decision. If I could find a house this size, in this condition with the amount of property this house had, I wouldn't mess with a short sale at all.

The biggest problem we've had with trying to find a house is that most of the homes on the market are just way overpriced. I feel sorry for people who are just trying to break even on their house and walk away, but the houses will never appraise.

Then there are a glut of homes that are total gut jobs. We'd be getting in over our heads purchasing one.
We're going to think longer about this house and see what happens.

Our agent said that the house would not be on the market and that they would not be accepting other offers. We can get a loan no problem on our end. I was worried that someone could come and offer the bank cash for the house and buy it out from under us.

But my agent told me that we would be the first in line and that they would not accept other offers. That is an excellent point made here that by law an agent has to present any offer they get! So to avoid this problem, we asked that they can't keep the house on the market or to accept any other offers other than ours. Thus avoiding the problem of the bank shooting us down and taking an offer better than ours.

He also said that since we've never met the owner, it would not be a problem that we buy her house as a short sale. He said that it's relatives that are the issue or if they could prove there is a relationship/friendship. But we don't know the sellers from Adam so hopefully it's not an issue. I want to say, why would the bank care who buys the house? As long as someone buys it. But I can see how allowing friends and relatives to buy your house could lead to fraud.

I tried avoiding the short sales because I know they are a PITA but it seems hard to avoid them these days. I've been really disappointed with the lack of homes to choose from. I guess so many people are upside down on their mortgages that they just aren't moving.

I thought selling our house would be the hard part and that buying would be fun. So far, not so much, lol. Welcome to buying a house in 2011. So different from when we bought our first house in 2000.

[Terryj]

Buying a short sale is typically a pretty good deal if you can wait it out, some short sales in my area have taken a year or more to close. It all depends on how many lenders have a piece of the property, does the house have a second mortgage on it. Not only do these have to be approved by the 1st mortgage carrier but also by any other interest involved in the property, this can take time.
Short sale are not a real hot item for a bank becuase there still getting their mortgage payment, if the home is in default then forecloser documents will be generated.
What happens in the owner is having a hard time making their payment and wants out of the contract, they submit to the bank a statement of sale and a reduced price than what is owed, then ALL investors involved must agree to the price, if there is only one investor then it is a piece of cake as long as the bank agrees to the price being offered. If there in no real estate broker involved then it is up o you to do your own due diligents on the home.