Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I know this sounds like a stupid question but I see a lot of listings saying "pre-forclosure-hurry!!" like you better hurry and buy it as a short sale or it will be more when it turns into a forclosure. Don't banks want to get rid of properties quickly when they go into forclosure? Wouldn't the houses be the same price as a short sale or even less? There are a bunch of short sales in a neighborhood we like, so if we wait, will they eventually be forclosures if they don't sell? We don't want to deal with a short sale but wouldn't mind buying a bank owned prop since it goes thru quicker. I just get confused when I see the "hurry get it now!" listings. (I know some of that is the realtor marketing)...
Accross from me the owner had a buyer for his short sale (more than a year ago) for $ 199K and after a year being foreclosed on the bank sold it for $ 195K....! It seems they need better people at the banks who can really do the math.. paying property taxes for more than a year, paying HOA fees for a year has cost them more than if they would have taken the $ 199K....although I don't know if something else was going on, I only know that the bank wanted $ 259 K at that time.
Yes, if a short sale does not sell the bank will foreclose on it and put it back on the market as an REO.
Whether or not it will be at a higher price or lower price than a short sale is anyone's guess. The short sale and REO departments rarely if ever talk with eachother so what a short sale deal may accept or not has no bearing on what the REO dept will list the property. The REO dept will simply order BPO's or appraisals and list the property where the REO manager beleives it will sell quickly.
If your asking yourself why a bank wouldn't just accept a short sale when in all likelyhood they will have to sell for less later after foreclosure, good question. The banks obviously would be better off with accepting the short sale, but they are just so inundated with these requests they simply don't have the man power to get them done, and there are so many other parties that have to be involved with the deal going through (all that are understaffed) that the shear logistics of getting them done is next to impossible. When a house goes through foreclosure the courts take care of all those other parties with an interest in the home.
There is no legal or practical reason to believe that banks will get more or less from a short sale than a foreclosure. The price of EACH house is determined by the condition of that house alone and the reason / circumstance of the sale really are separate. Overall market conditions are set one-by-one...
I have seen more than a few house sell for more in foreclosure than what the short sale was rejected for. The house has to be in good condition and it helps if it is custom / semi-custom area as that does make each property less easily compared to other nearby for-sales...
I do think that a "pure foreclosure" is MUCH faster because at that point the whole "loss review" has happened and the lender wants to get this 'thing' off their balance sheet very quickly. Banks hate to have title to real property.
There is no legal or practical reason to believe that banks will get more or less from a short sale than a foreclosure. The price of EACH house is determined by the condition of that house alone and the reason / circumstance of the sale really are separate. Overall market conditions are set one-by-one...
I have seen more than a few house sell for more in foreclosure than what the short sale was rejected for. The house has to be in good condition and it helps if it is custom / semi-custom area as that does make each property less easily compared to other nearby for-sales...
I do think that a "pure foreclosure" is MUCH faster because at that point the whole "loss review" has happened and the lender wants to get this 'thing' off their balance sheet very quickly. Banks hate to have title to real property.
But the legal fees and holding costs almost always outweigh the higher sales price. The problem is loss mitigation and foreclosure departments are independant and don't work together at all. Banks will typically lose less on a short sale but they won't always take one. When they factor in the write off costs for the loss it looks better to hold sometimes. Ultimately, they are bottom line but don't always make the right call.
Sometimes yes, sometimes no. Sometimes the bank does a loan modification. Sometimes the seller makes up the payments with or without the help of one of the government programs. Sometimes the bank just takes it's sweet loooong time to follow up with the foreclosure and the house just sits there.
I think this coming year and the beginning of the next are going to be vvvvverrrrry interesting.
In addition to what many of the above posters have said, sometimes there is MORE than one lender involved and that can complicate the process further - actually pushing it to foreclosure.
For example, if there is both a 1st and a 2nd Mortgage - in a short sale the 1st lien holder may get paid 100% and the 2nd lien holder - nothing (or they are the one taking the biggest share of the loss). If the house goes to foreclosure, again the 1st lien holder will get paid 1st - with any remaining proceeds going to subordinate claims.
In some cases, it is the holder of that 2nd lien that will push the house to foreclosure during the short sale process (where they would get NOTHING) and THEN, be the party to buy it on the courthouse steps - thier bottom line is to protect their interest in the property and limit their loss.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
