Disadvantages in purchasing a short sale?

[jojo7]

Well, going to try and purchase a short sale. We placed a bid on a home that was at a "pre-approved" price. Both agents feel it should go through rather quickly for a short sale but not counting my little chickens. If we get this house, it is truly a steal of a deal. I will post my experience and hopefully it will positive for all the short sale purchasers out there.

[LetsRock]

Originally Posted by SSinOC

The buyer walking
-2 or more lenders
-Mortgage insurance companies that have to sign off before close.
-Sellers that are unwilling to complete the short sale.
-Agents that have these types of deals on the back burrners so they are late to respond.
-The market dropping or rising
-Forclosure on the other side of the bank.

You forgot the buyer making a bunch of last minute demands for closing cost help or or other financial incentives after four months or waiting because they now know they have you over a barrel and can't afford to relist.

[cmrubin]

Originally Posted by Bideshi

That's exactly what I was told and then found the house actually sold for less than I had offered. What can you do? There's corruption throughout the business.

Interesting -- I had a similar experience. I toured a beautiful bank-owned property the day it went on the market and made an offer $20K over asking. The bank sat on it for three weeks, then told me that if I wanted the house, I would need to close before the end of the year, less than 10 days away including the Christmas/New Years holiday period. My agent advised me to counter with a 30 day close as she felt we could not schedule inspections in the time the bank required.

The bank summarily rejected my offer and the house sat on the market for another three months. It eventually sold for $15K less than what I had offered. On the one hand I feel as though I dodged a bullet (eventually bought a much more suitable property for less) but on the other have always wondered whether it was either gross incompetence or inside dealing.

[plusmiles]

Bank owned is a post foreclosed sale, typically the bank made the winning bid at the auction to help pay for the outstanding principal. This is not a short sale. I'm no expert on this, just from what I've learned while trying to purchase a home in the past 18 months.
So my latest bid is on a REO (bank owned) home, originally listed for $166k, within 30 days the price dropped to $153k, and since I was having trouble winning any bids, my pre-approved loan limit being $180k, I have been tentatively accepted on my bid for $175k.
Now I'm waiting to see what the appraisal comes in at before I can get final loan approval, another game we play. Why wouldn't the bank already know what the true market value (TMV) was on their holding??? And, here's the killer question, if the TMV is below my offer, my loan may be disapproved. Then guess what happens to the next potential buyer, you guessed it, he pays for another appraisal, this could be within 10 days, no matter, we are so stupid we can't rely on the first appraisal already performed. Several realtors here in the Phoenix area have told me there is a shortage of properties, of a specific type and mini bidding wars are already occuring. This I have to agree with, after my attempt to bid on 4 in the last 6 months, and only 4 that met my preference. Also, the specific property type (1800+ sqft on a 1.25 acre) are gone with 7-10 days, right now in my part of the valley, there are two active listings under $185k, they are in bad shape. That's it, where are the rest? A friend is shopping for a similar home, small lot, pool, RV gate, can't find one under $120, although those he's bid on, were gone within days at or above listed price, many for cash. He hasn't been sent any new listings (or found any using the MLS search tool) in his area now for the past 4 days. Buyers with money waiting here...