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Old 09-17-2009, 02:06 PM
 
Location: Fairfax County, VA
77 posts, read 248,386 times
Reputation: 33

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I am in process of buying a Townhouse and in price range of 250K-300K, all the listing I am getting from my agent is Short-Sale.

I am not familiar with short-sale property.
Can any one please help me understand

what should I be looking for in-terms of contract/offer ?
What my offer should be ? Is low-ball offer not good?
Can I put any condition in contract to close by certain date?
Can bank reject my offer even after contract signing ?
Is there a way to protect from getting rejected by bank after signing offer?

most short-sale will say like and would like to understand them.

"SHORTSALE AND THIRD PARTY APPROVAL"
"Using the seller's title co is must."

My agent keep telling us that short-sales are not worth looking. Go for regular sale..do agents get less % of commission on short-sale?

If I get a regular sale in same price range is it better to go for regular sale?

Thanks a lot!
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Old 09-17-2009, 02:36 PM
 
Location: Wake Forest, NC
835 posts, read 3,537,026 times
Reputation: 646
I can't speak to the contract side of a short sale but can explain the difference from a normal sale.

Normal sale- John lists home for $400k and owes $300k. Sales closes and John pays off his bank and keeps the difference.

Short sale -John owes $300k but his house is only worth $275k. He doesn't have the $25k to make up the differemce so he asks the bank to accept a short sale (sell for short of what is owed). You are now negotiating with the bank rather than an individual. A few things come into play here: 1- will the current owner keep up his payments? 2- is this offer better than what we could get if we foreclosed? 3-what's the property worth today? The bank weighs this information then makes a decision as to whether or not they will approve the short sale- do they want to cut their losses and accept slightly less than what their currently owed?
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Old 09-17-2009, 07:24 PM
Status: "Planning for the future." (set 7 days ago)
 
Location: Just south of Denver since 1989
10,690 posts, read 28,571,668 times
Reputation: 6865
regular sale 10 days to 2 months to close

short sale this close to forever to close.

you need to offer fair market value or the lenser will not accept the proceeds to release the lien(s)

you need to have a lot of patience
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Old 09-17-2009, 10:02 PM
 
1,465 posts, read 4,426,597 times
Reputation: 849
Your realtor can help you with an offer. In the listing, it is likely that the realtor made up the price to generate interest. Banks do not typically broadcast what they will accept short. It is your decision on what to offer but if you go too low, it is likely you won't hear anything. The thing about dealing with banks, is they are not emotional. Even if a property has been listed for many months, they don't get all giddy when someone comes in making any offer and become eager to deal. If the offer is too low, it gets rejected and a lot of times, even the realtor isn't told.

If they choose to foreclose, they may be able to cash the PMI that the borrower had to get if they were light on the down payment. Note: most of these short sales are when the down payment came in short of 20%. So a short sale is not always preferable to a foreclosure from the bank's point of view.

You do not get to select the timing. You can tell them all you want that it needs to be closed by a certain date and they will ignore that request. I really don't think they will accept contracts where that is written in the offer.

The process can take quite a while (several months) but when they are finally ready, they will tell you when it has to close. If you are financing this, you need to get all the work done and hold off on the funding until they give you the green light.

It is a tough process and as been suggested, you do need patience. Sometimes it can work out quite well. Most of the time, a deal is not reached.
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Old 09-22-2009, 01:56 PM
 
Location: Connecticut
24,706 posts, read 40,305,911 times
Reputation: 7001
This is interesting to me. A house I was watching is now in a short sale. They dropped the price 10% yesterday and the realtor contacted me via email today to tell me about the price drop and that it is now a short sale. The realtor said the house is being sold "as is" which concerns me since the house is about 25 years old and most of it is original (heating, electricity, roof, etc.).

I did run some numbers on the house (I had posted some questions here on it) and figured it would take $50 to $75,000 to bring the house up to standards and about $100,000 to do it real nice. Currently comparable remodeled homes run about $100,000 more than the current asking price, so it really would not be much of a deal unless they are willing to take less than the current asking price. I can't decide if it is worth it.

The house is not exactly what we were looking for but it was pretty close. It has a lot of character and is in a nice neighborhood. I am thinking that since it is not a house we "love", maybe we should sit back and see what happens. If it does not sell in a reasonable amount of time, does that mean it will go to foreclosure? Any idea how long that could be?

Any thoughts? Jay
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Old 09-22-2009, 02:13 PM
 
Location: Richardson, TX
10,211 posts, read 16,789,489 times
Reputation: 24878
If the sellers are paying their mortgage payment while trying to short sell, then it will not go to foreclosure. Otherwise it will be subject to the bank's usual foreclosure timeline regardless of it being listed as a short sale.
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Old 09-22-2009, 05:39 PM
 
Location: Tempe, Arizona
4,511 posts, read 11,588,940 times
Reputation: 2190
Quote:
Originally Posted by DCNY View Post
I am in process of buying a Townhouse and in price range of 250K-300K, all the listing I am getting from my agent is Short-Sale.

I am not familiar with short-sale property.
Can any one please help me understand
> Best suggestion is to work with an agent that understands short sales

what should I be looking for in-terms of contract/offer ?
> Same as a "normal" offer; should include a short sale addendum with additional buyer protections
What my offer should be ? Is low-ball offer not good?
>Best to offer fair market value or close to it; as said before bank will usually reject offers not reasonably close to fair market
Can I put any condition in contract to close by certain date?
>You can, but bank will ignore it; bank will tell you closing date if they accept
Can bank reject my offer even after contract signing ?
>Yes
Is there a way to protect from getting rejected by bank after signing offer?
>No
most short-sale will say like and would like to understand them.

"SHORTSALE AND THIRD PARTY APPROVAL"
>The bank is the "third party" that must approve the offer
"Using the seller's title co is must."
>Seller has a relationship with a title co that is helping to process the short sale; may also be the preferred title co of the seller's bank
My agent keep telling us that short-sales are not worth looking. Go for regular sale..do agents get less % of commission on short-sale?
>Some may be worth it, but you need lots of patience, with likelihood that your offer will not be accepted, or it will be countered. Not a good idea if you aren't prepared to wait months for an answer that may be "no". Often times the lender will ask the agents to reduce their commission.
If I get a regular sale in same price range is it better to go for regular sale?
>Yes
Thanks a lot!
>You're welcome
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Old 09-23-2009, 07:33 AM
 
Location: Connecticut
24,706 posts, read 40,305,911 times
Reputation: 7001
I have another somewhat dumb question. The price of the home I am looking at is higher than I would be willing to pay given its current condition and the prices of comparable homes that are in much better shape. Does the home being a "Short Sale" mean the bank will not accept a lower offer? The agent wants to show us the house but I am not sure I would want to go see it if that price is not negoable. Jay
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Old 09-23-2009, 10:37 AM
 
Location: Tempe, Arizona
4,511 posts, read 11,588,940 times
Reputation: 2190
Quote:
Originally Posted by JayCT View Post
I have another somewhat dumb question. The price of the home I am looking at is higher than I would be willing to pay given its current condition and the prices of comparable homes that are in much better shape. Does the home being a "Short Sale" mean the bank will not accept a lower offer? The agent wants to show us the house but I am not sure I would want to go see it if that price is not negoable. Jay
That's unusual. Most short sales are priced below market value to attract buyers. The bank does not set the initial price and has probably not been involved yet. They need an offer to start negotiating with the bank whether or not it's realistic. Worst case, they may find out what the bank will really accept then can work with the buyer or find a new buyer that will pay that price.

You should offer what you think is fair value. The seller's lender will do their own market assessment to determine if your offer is fair. The lender will also have to determine if the seller qualifies for a short sale, such as having a hardship that prevents them from repaying the outstanding dept. None of this happens until they get an offer. And expect to wait a long time before you get any feedback from the lender. The listing agent should be in regular touch with the lender to check progress and update you or your agent.
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Old 09-23-2009, 10:49 AM
 
1,156 posts, read 3,236,280 times
Reputation: 485
Quote:
Originally Posted by JayCT View Post
This is interesting to me. A house I was watching is now in a short sale. They dropped the price 10% yesterday and the realtor contacted me via email today to tell me about the price drop and that it is now a short sale. The realtor said the house is being sold "as is" which concerns me since the house is about 25 years old and most of it is original (heating, electricity, roof, etc.).

I did run some numbers on the house (I had posted some questions here on it) and figured it would take $50 to $75,000 to bring the house up to standards and about $100,000 to do it real nice. Currently comparable remodeled homes run about $100,000 more than the current asking price, so it really would not be much of a deal unless they are willing to take less than the current asking price. I can't decide if it is worth it.

The house is not exactly what we were looking for but it was pretty close. It has a lot of character and is in a nice neighborhood. I am thinking that since it is not a house we "love", maybe we should sit back and see what happens. If it does not sell in a reasonable amount of time, does that mean it will go to foreclosure? Any idea how long that could be?

Any thoughts? Jay
I'm currently in a short sale contract, and I would only go for it if you knew if was financially worth the hassle. If value-wise you're looking at 2 500K "apples" and one is a short sale and one is traditional, go traditional.
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