Bidding low and delaying possession on a foreclosure (bank owned, for sale)

[Rlow04]

I'm new on the boards and I've searched/read about some of this, but I was wondering if anyone has any advice for me.

My wife and I are coming down over president's day weekend to look at homes. We are both finishing up our bachelor's degrees at the end of April, so we can't move before then.

If we see a foreclosure that we like when we're down there, is the possession date negotiable? We wanted to delay moving until August, but if we found something we really like we'd be willing to move in May. So will a bank work with us on the foreclosure date so that we don't have to pay for the house until May? This is assuming that we're buying it at the end of February.

Also, can you bid low on a foreclosure? Does the time on the market affect whether or not the bank will accept a low bid?

If we don't see any foreclosures we like and we want to move in August, do we have enough time to try a short sale? March, April, May, June, July, August - so I guess it would be 6 months. Is that still the average short sale time?

Thanks!

[khuntrevor]

They are going to want to settle withing 30 days, and a quick close is a good line to add to your offer. After that, you can move in any time, and will be responsible for accrued taxes, trash, etc......
Are you a cash buyer?

[Rlow04]

No, I'm not a cash buyer. Is that a big problem?

[rjrcm]

As kuntrevor hinted, cash and a quick close will help you get a better price. Banks will not negotiate an extended close. Hopefully you are working with an agent that can help you with current market value estimates for homes you may want to purchase. With a good understanding of market value and other variables of the listing, you can then decide on your offer. And yes, time on market with no price change may affect your offering price.

[AZJoeD]

From your post, I am assuming you are a first time buyer and you will likely be using an FHA loan. FHA loans are taking about 45 days to close (from contract date). Add about a week of negotiation and you at 50+ days.

As mentioned here banks prefer short closes, so they will try to push you into a 30 day close. Stick to your guns and ask for 45 days.

In respect to the Short Sale question, time frames are all over the map. Anywhere from 30 days to 6 months (or never). Your agent will be your best resource to help you with determining how to proceed.

You do not need to be here in Arizona to contract for a home or even to close it, so don't worry about having to travel back and forth.

[Captain Bill]

Rlow, you're mixing up the use of the term foreclosure.

A "foreclosure" property is one that has already been foreclosed on, and taken back by the bank at the trustee sale.

They are then referred to as "bank owned" or "REO"

On the REO's, they're similar to a regular sale by an individual, except that you're buying it from the bank. When you make an offer on a bank owned, you'll get a response back within a couple days (not on the weekend) and it may be an acceptance of a counter offer.

They may negotiate the close of escrow date, but only by possibly 45 days to accommodate an FHA type loan. You would state the closing date in the purchase contract.

Do not expect to low ball the bank and get a steal. They are holding pretty tight on their prices. Your agent should provide you with information on the valley market, the community market where the property is, and information on the property itself in order to determine the current As Is market value of the home. Then you'll decide the proper amount to offer, with your agent's guidance.

(Remember, the agent provides information and counsel --- you make the decisions)

A "pre-foreclosure" is a home that has not gone through foreclosure yet. It has been issued the notice of trustee sale with a scheduled sale date.

The pre-foreclosure home that's listed for sale is called a "short sale", meaning the seller is asking the lender to take an amount "short" of the amount owed on the mortgage as full payment.

That trustee sale date can only be extended by the beneficiary, or holder of the note. Sometimes they extend them for no apparent reason, and if they are working on an offer they usually will extend it so they can get the home closed.

As others have said, the short sale can take from 1 to 6 months, depending on many different circumstances.

When you choose an agent, make sure s/he knows the short sale guidelines for FHA, Fannie Mae, VA and Freddie Mac loans, as well as conventional and the Fannie Mae HAFA guidelines.

The agent who knows those, will be able to ask the listing agent questions to determine the probability of the short sale going through. Some agents who have short sale listings are not completely familiar with all the guidelines, and their short sale success rate is only around 25%, while the agents with more knowledge is much higher, up to 95%.

[AzWickedSS]

If you keep watching the market around here you can get some real steals. I would stay away from short sales as much as possible. As for a closing date, foreclosures avg about 45days but like myself and several of my friends who have bought houses recently the wait was even longer due to jumping through a bunch of hoops. Do as much research as possible before you get in the area. I watched several houses start in the high 200k range including the one I am in and I closed well under 200k after all the negotiations.

If you want a good site to follow and update you often for a certain type of house and location let me know. My house wasnt even showing up in MLS through my realtor because it was not in my price range we had added into the server. I can also recommend someone for you as well, I put my realtor through war, we saw well over a hundred houses and she went along for the ride even though I was extremely picky with what I wanted. PM me if you want any info.

[Rlow04]

Originally Posted by Captain Bill

Rlow, you're mixing up the use of the term foreclosure.

A "foreclosure" property is one that has already been foreclosed on, and taken back by the bank at the trustee sale.

They are then referred to as "bank owned" or "REO"

A "pre-foreclosure" is a home that has not gone through foreclosure yet. It has been issued the notice of trustee sale with a scheduled sale date.

The pre-foreclosure home that's listed for sale is called a "short sale", meaning the seller is asking the lender to take an amount "short" of the amount owed on the mortgage as full payment.

Thanks Captain Bill for the clarification. I've been reading around on the boards and you always give sound advice. I think I was clear on the terminology, but I want to make sure I understand and am using them right:

I'd rather purchase a foreclosure (REO/bank owned) because it's more of a sure deal and immediate, but if I find a foreclosure i like in February, I could paying on it by the end of March (not ideal for me). This makes me want to consider trying a short sale/pre-forclosure because it would delay the purchasing process a little longer and I'd take possession early to late summer. Even if it doesn't work out, I might still have time to look for a good foreclosure/regular sale.

Did I say that right?

Oh, and in another thread you mentioned going through a company that negotiates short sales. Would you recommend that even if I have two agents that understand short sale guidelines?

Thanks again!

[khuntrevor]

If you come out ahead by being in a short sale process for 6 months, you will be one of the few. Yes, some of these deals close, but................You are making an agreement to buy something from someone, who does not own it, and it is not there decision. Unless you see that a price/deal has been approved by a senior bank official it's almost a joke. It is nice of you to give them an option to sell it to you at that price, even though you will gain zero if they don't. I've seen the SS commercials, a lot by John Hall, who I thought WAS reputable. They are giving people false hope of being to walk away from a 300K obligation unscathed. It just ain't gonna happen. It is only slightly more legit than loan modification.

[Rlow04]

So if a short-sale is pre-approved, what does that mean? Did they have a buyer walk away after the bank agreed to that price? Is there another way taht someone can be pre-approved? And does it realistically increased the chances of having it go through?