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Truth is I have heard of short sales where the offer came in February 09 and an approval has not been received as of 12/1.
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Originally Posted by PalmSpringsBound
I have been working on purchasing a home. My rule of thumb has been to ignore short sales unless there is a pre-approved short sale. Generally this is a home that has gone through the entire process and the buyer has then backed out. There is generally a person handling the entire thing and approvals can be quick. This isn't for bottom feeders. If the listed price is 250000 don't expect to walk away with the property for 85000. But at this point a very strong offer will likely be considered quickly. Otherwise I feel like short sales are homes that are not really for sale for the listed price. Also you can easily be one of 15 offers some of which are cash and some of which are over the asking price so if you are planning on financing the home go look for a home that is really on the market.
In my experience, 90 days is a fast response on a short sale from a large bank. We have one in the office that is currently at 7 months with no response yet.
I think one of the biggest reasons it takes so long is simply that the processors at big banks are completely overwhelmed. On a recent BofA short sale, we were told that their processors EACH have between 500 and 1000 files on their desk at any given time. No one can keep up with that.
On the other end of that, as Silverfall mentioned, local banks have been known to give responses within 24 hours in some cases. We even had one that we had a buyer offer on a Sunday afternoon and by Monday morning we had a response. It was a little eerie.
I think that it's a matter of how aggressive your real estate agent is too. I am in the same situation and I live in CA. A friend of mine was also in this situation for about 30 days and her agent contacted the bank and said that they were going to pull out of the offer because they didn't trust the wait from the bank......They got an accecptance that same day. You need an aggressive agent
There may be host of reasons, one or more of the following:
-Banks keep them as an asset on their books until foreclosure, if they complete a sale it goes on as a liability on their balance sheet
-Tax laws/writeoffs give banks financial benefits for foreclosures
-There are many people involved in the transaction that don’t know what they are doing and/or working against each other (bankers, realtors, mortgage servicing co. lien holders, etc)realtor may be trying to get the short sale, while seller may be trying to get modification loan, etc.
-Banks probably make money on short sales that are denied
-Banks probably cannot sell lower than the facevalue of home
It’s not telling how a bank is going to handle one particular loan, based on the type of mortgage, how it is structured, and local foreclosure laws, in addition banks try to maximize profits by tax laws/writeoffs all factor in the slow process. Also, many banks sell these securities to investors and that can take a long time as the bank has to go through various people that are the stakeholders. It’s a sad thing for buyers on the waiting side and the realtors doing all the work, bec 3 out of 4 shortsales fail, which will only make real estate values fall even further.
Self-interest=brokers and banks, it’s all about money. The sad and worse part about it is: the ones affected by all these unscrupulous deeds are the least that can afford it.
I could have gone through 6 of them by now, but who knew it would take me so long to find the right house I avoided them at all costs, but if I had to do it over again, I'd make the offer on one then keep looking. It seems pretty easy to back out of them. You can get a pretty good deal sometimes and other times not so much.
Most of the best realtors around here that handle short sales are CDPE (i think it means Certified Distressed Property Experts??) and they will submit only one offer and then take back ups. They are pretty successful but they still take at LEAST 3 months.
I'm in the midst of a short sale purchase right now with a pain in the arse client: my husband.
Seriously though, I've avoided short sales like the plague - but this one, for all intents and purposes has gone pretty smoothly. I have the HUD in my hands and we'll be closing 2 months and 1 day after the inital offer was submitted.
All thanks due to a fantastic seller's agent. She really REALLY knows her stuff and the process - and understands it too. If it wasn't for her I have no doubt that this deal wouldn't be happening so quickly and so cleanly.
Thanks tryin2buy and Chuckity. I really appreciate all of the information.
My DH is totally against getting short sales/foreclosures but there is one in the neighborhood we love. We haven't seen it yet but the price seems amazing as is. So low for that neighborhood that DH is actually considering checking it out.
I wouldn't want to wait 6 months, but 3, no more than 5 sounds great since we really don't want our DD to change schools in the middle of the year. I wanted to try to get in on the $6500 tax credit and close by April 30th, but would quickly give that up to get this deal. Also, if repairs were needed we have some money to do that, have trustworthy do good work people who could do them, and we are presently in a rental so we could get the work done with out putting up with the mess...
But
In doing a search on CD, I think I don't have the guts to go for a short sale. Too many horror stories. Too many what if's. I seriously could not go through putting in an offer expect to close before August to find out that we weren't able to get it after all -and then try to scramble to find something before the school year... wouldn't be able to take it.
And Chuckity, you made me chuckle indeed with your, "...pain in the arse client: my husband" Good luck with your purchase!
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Kickbacks
I avoided them at all costs, but if I had to do it over again, I'd make the offer on one then keep looking. It seems pretty easy to back out of them. You can get a pretty good deal sometimes and other times not so much.
Good luck with your purchase!
