Short sale process?? (bank owned, short sales, real estate)

[navigator72]

Hi,

My wife and I are looking at a home in Maine that has slipped into a short sale. The home is already listed well below the town valuation. How low would the finance company typically go on a offer? Can someone give me the is and outs of the short sale process? Thanks

[txmom]

I hope one of the Maine real estate agents on this forum replies to your question, but in the meantime you could head on over to the Florida forum and do a search on "short sales" - there is a ton of information about the short sale process over there.

[CoastalMaine]

Originally Posted by navigator72

Hi,

My wife and I are looking at a home in Maine that has slipped into a short sale. The home is already listed well below the town valuation. How low would the finance company typically go on a offer? Can someone give me the is and outs of the short sale process? Thanks

Hey Navigator,

Not sure if this will offer you any insight, but it might. Others may know more than I can offer which is just what I came up with when I googled short sales.

Buying Short Sales - Before You Buy a Short Sale - Home Buying and Short Sales

[WhoFanMe]

Originally Posted by navigator72

Hi,

My wife and I are looking at a home in Maine that has slipped into a short sale. The home is already listed well below the town valuation. How low would the finance company typically go on a offer? Can someone give me the is and outs of the short sale process? Thanks

The answer is, "it depends." The town valuation is irrelevant to it's market value, don't get hung up on that figure. A short sale is where the proceeds after expenses don't equal the balance due on the mortgage and the bank or mortgage company agrees to "settle" with the homeowner to let them get out whole without having to deal with the foreclosure process. It's a win for the lienholder as they will generally net more than they would should they have to foreclose and it's a win for the owner who doesn't have a foreclosure on their credit report. It could also be a win for the buyer, if the price of the home + the improvements made are less than the current market value. Should you decide to go this route be prepared to wait a long time for decisions to be made, as the process could be lengthy. I remember a previous post where you were unhappy with your Buyer Agent, hopefully you're working with somebody who can do a market analysis for you and you're not in a hurry to move in.

[Zymer]

Originally Posted by navigator72

Hi,

My wife and I are looking at a home in Maine that has slipped into a short sale. The home is already listed well below the town valuation. How low would the finance company typically go on a offer? Can someone give me the is and outs of the short sale process? Thanks

Navigator- the house I am in right now was a short sale...and I'll tell you what, it was a long, trying process. The house was originally listed at $310,000 and the owners owed $295k on it. It sat on the market with no takers for a long time, and by July of '07 when my wife and I saw it, the listing price had dropped to $159,900. I made a low-ball offer of $120k that day.

I got a phone call a day or so later and was told that someone else had also made an offer but it was apparently also below the listing price (I don't really know if there was, in fact, another offer). I was told that I needed to make my best offer. Not wanting to lose the house by quibbling over a few thousand dollars trying to second guess the other [alleged] bidders I made the offer for the listing price. The offer was accepted (by the sellers) and the P&S signed. Then the "fun" began.

We were put off and put off and put off, being told that the holders of the 1st and 2nd mortgages were arguing and could not come to an agreement. It would appear that approval from the mortgage holders had NOT been given before the house was listed at that particular price.

To make a long story a little shorter...we didn't close until the 3rd week of Jan '08, even though we specified in the P&S that *WE* were prepared to close within 6 weeks.

From other reading I have done regarding short sales, it appears that my experience is not particularly unusual. There are some people who claim that they can get a short sale through in a relatively short time, and a lot of others who say that the process is a royal PITA and can be a drawn-out affair.

I can't say as to what the banks might accept for an offer, but I would say that, if you can, you should try to find out if the note holders have *already* approved the listing price. If they have, then in my opinion they would probably not be particularly likely to want to go any lower...but maybe they would. If they *haven't* already given approval for the listing price, then you might be in for a rough time even if you were to match the listing price.

What I *can* say, is that my experience with the short-sale process sucked, and I felt like I was being treated like a mushroom.

Maybe some of the pro real estate people that hang here can offer you some additional guidance.

Good luck.

[BoundtofindME]

Ok, I've only been involved in one short sale to date, and that was a year ago October. I was the buyer agent and my clients found the home of their dreams (after showing them about 20 other properties they just happened to fall in love with the most difficult one to obtain). The whole process took approx. 3 months, really not bad compared to most. But, after writing up the P&SA, we were at the mercy of the seller's bank, as deadline after deadline passed without knowing anything concrete. Very stressful for my clients as they were relocating from another state and in the process of closing on their home as well. They ended up finding a short term rental in the area to tide them over, because we just did not know and could not find out for sure whether this deal would even close. Then the unexpected happened--the seller decided to start the process of bankruptcy without telling her agent (which meant all bets were off at this point). Somehow the seller's agent was able to work a minor miracle to pull the house out of the mix and we were able to make the deal work. As stressful as it was for my clients, I believe they would have done it all over again as they are now in the home of their dreams which had sold 9 months earlier for about $40K more. I also credit the seller's agent for keeping us in the information loop as much as possible -- always a bonus to have a good rapport between both agents as well as buyers and sellers who are willing to make concessions when appropriate.

I believe that any deal has it's own set of challenges, and then throw in the challenge of a short sale and there's probably an infinite number of scenarios that could develop, which makes it very hard to advise anyone of what to expect in this type of transaction. But that's my 2 cents on the subject and I believe it echoes what other's have said about it being a challenging process to get through. You just have to believe that the rewards will outweigh the obstacles!

[Elcarim]

The long-time closing routine seems about on par. We had some friends down here buy a short-sale house last year. It took them 7 months start to finish to get the deal closed.

[WhoFanMe]

Originally Posted by Zymer

From other reading I have done regarding short sales, it appears that my experience is not particularly unusual.

Maybe some of the pro real estate people that hang here can offer you some additional guidance.

I think you've summed it up well, Zymer.

[WhoFanMe]

Originally Posted by Elcarim

The long-time closing routine seems about on par. We had some friends down here buy a short-sale house last year. It took them 7 months start to finish to get the deal closed.

I think it will get worse before it gets better. Maine trails the nations in short sales and bank owned sales, however we are catching up. The financial meltdown is going to pull employees away from working on these non-performing assets, leaving those left behind with poor morale and even more files on their desk to work through.

[navigator72]

Thanks for all the helpful responses. We are going to give our broker a call in the morning and see what he has to say.