Short Sales.... - Phoenix area - Arizona (AZ) - Page 2 - City-Data Forum

wng · 09-17-2008, 12:17 AM

I am about to close on a short sale property. I was warned about the lengthy time it would/could take to hear back on these short sales.
I was lucky, their previous offer fell through due to financing, and I felt the property was worth the asking price and didn't low ball an offer. The seller's lender(s) put up a bluff, and demanded more money, but I called the bluff and they accepted the offer. 1 week to offer, 2 weeks to close, otherwise they claimed it'll be foreclosed on. This turned out to be a very fast transaction! Another short sale offer I made still hasn't replied in over a month.

Keep in mind, these short sale asking prices have not been approved by the lender(s).
So, the asking price is kind of like a bait and switch sale. Get you interested, but possibly never had a real chance it would sell for that price. That's why it takes so long, as seller and lender(s) try to compromise. The property devalued, seller can't make payments, lenders still demanding what's owed. Seller threatens to allow foreclosure. Lender(s) loses even more capital.

Short sales are frustrating if you hope to get an answer on a particular home you really like. The wait can be as long as 4 months! My case was an exception.

You will be buying it as any other home. Get inspections done, HOA CCRs reviewed, SPDS and CLUE docs must be provided by seller, title insurance purchased, and in most cases, 1yr home warranty included by seller.
Just be sure any short sale addendum to your purchase contract requires that the seller is responsible for and must pay any liens, assessments, fines, overdue HOA fees, accrued up to the day of close of escrow!
If the seller can't pay the mortgage payments, (s)he's sure to have not paid up on other bills regarding the property.
They can be transferred to the buyer upon closing, especially HOA balances.
(boy I hate HOAs!! They are unAmerican!)

jd433 · 09-17-2008, 03:32 PM

O.K. I have done MANY!! short sales. I can can tell you for sure. Listen in almost every case the bank will not take as little money for a home in a short sale as it will in a REO situation. You are way better buying an REO than a short sale. The reason is that in a REO the bank actually owns the property and wants to get rid of it. In this market they will drop the price in order to get it sold. Plus you are dealing with the REO department.

I the case of a short sale the property is owned by the individual who bought it to begin with. You will have to prove through a lengthy process to the loss mitigation department that the property is not worth as much as the owner owes. Now the loss mitigation department will not just let the property go for a song. After all they are LOSS MITIGATION. ALSO A LOT OF SHORT SALES ARE NOT APPROVED AND YOU MAY WASTE A LOT OF TIME JUST TO FIND OUT THAT YOUR SALE IS NOT APPROVED.

The thing that used to get me mad is that the process is not that long or complicated. The problem is that the Short Sale negociator often will just SIT ON YOUR FILE! I mean your file is right there next to them, they know there is an offer on it and they just don't do anything to make it happen. This is why it really takes so long.

Ponderosa · 09-17-2008, 07:41 PM

Quote:

Originally Posted by jd433

O.K. I have done MANY!! short sales. I can can tell you for sure. Listen in almost every case the bank will not take as little money for a home in a short sale as it will in a REO situation. You are way better buying an REO than a short sale. The reason is that in a REO the bank actually owns the property and wants to get rid of it. In this market they will drop the price in order to get it sold. Plus you are dealing with the REO department.

I the case of a short sale the property is owned by the individual who bought it to begin with. You will have to prove through a lengthy process to the loss mitigation department that the property is not worth as much as the owner owes. Now the loss mitigation department will not just let the property go for a song. After all they are LOSS MITIGATION. ALSO A LOT OF SHORT SALES ARE NOT APPROVED AND YOU MAY WASTE A LOT OF TIME JUST TO FIND OUT THAT YOUR SALE IS NOT APPROVED.

The thing that used to get me mad is that the process is not that long or complicated. The problem is that the Short Sale negociator often will just SIT ON YOUR FILE! I mean your file is right there next to them, they know there is an offer on it and they just don't do anything to make it happen. This is why it really takes so long.

jd, you're alive! You haven't been trolling the AZ forum lately and I wondered if you got swept away in Ike. I guess your power is back on if you are posting.

As for the short sales. Why wouldn't the banks let the house go for whatever they get offered. The Fed has demonstrated in the past few days that it is going to reach into the pockets of the very people these guys screwed over with their fraudulent lending and securities packaging and bail them out. What a sham - sweetheart deals for Bank of America and Chase, and corporate welfare for the fat cats while the little man goes homeless. But hey, we taxpayers now own an insurance company!

zantur1 · 09-29-2008, 09:57 AM

Quote:

Originally Posted by barryhussein

This is 100% false. I wouldn't go near a short sale. Just wait a few months and the bank will own it anyway. Foreclosures yes; short sales --no way Josue.

The bank won't own the home if the Realtor is successful in negotiating a short sale with the lender. If a seller does a short sale, they will be issued a 1099 for the shortfall and it will be much less damaging to their credit score vs a foreclosure and the sellers will be able to purchase another home within 2 yrs vs 5-7 yrs with a foreclosure on their credit. This is a better alternative for both the lender and seller. If the Realtor is experienced in dealing with Lenders, the process should not take as long as 3 months, but closer to a month. This could also be a great deal for the buyer and most times the house is in much less disrepair than a REO.

souhradaa · 05-15-2009, 09:31 PM

We are in the process of buying a short sale. We offered the asking price, cash off, no contingencies. The home is only 10 years old and seems to be in good shape. The home has a first and second mortgage. First mortgage is thru Bank of America, Second mortgage is thru Chase. BOA has accepted our offer, but Chase is demanding something to discharge the 2nd. How do we get these banks to call us back as they do not reply? Any help is appreciated. Thanks, Anthony.

Rick Lee · 05-16-2009, 12:23 AM

The two short sales I've looked at and wanted to buy were priced at exactly 50% of their last sales price in 2005 - $560k down to $280k and $480k down to $240k. No way are the mortgage balances anything close to the current market value. The banks will be taking huge losses on these. But they're losing money every day these houses sit for sale. I know on one of them the sellers are not making payments anymore. Why should they? Their credit is already trashed and the bank would rather have the house occupied than sitting vacant. They can just wait the process out, save their money and live there for free. They sure do keep a clean and well-decorated house.

azcater · 05-16-2009, 08:04 AM

Quote:

Originally Posted by zantur1

The bank won't own the home if the Realtor is successful in negotiating a short sale with the lender. If a seller does a short sale, they will be issued a 1099 for the shortfall and it will be much less damaging to their credit score vs a foreclosure and the sellers will be able to purchase another home within 2 yrs vs 5-7 yrs with a foreclosure on their credit. This is a better alternative for both the lender and seller. If the Realtor is experienced in dealing with Lenders, the process should not take as long as 3 months, but closer to a month. This could also be a great deal for the buyer and most times the house is in much less disrepair than a REO.

Just an fyi, this is still true today, his information is right on. There are exceptions of course. Also, be careful if your 2nd is a HELOC because they can go after you for the difference if they determine the money wasn't used to improve the house.

azcater · 05-16-2009, 08:06 AM

Quote:

Originally Posted by souhradaa

We are in the process of buying a short sale. We offered the asking price, cash off, no contingencies. The home is only 10 years old and seems to be in good shape. The home has a first and second mortgage. First mortgage is thru Bank of America, Second mortgage is thru Chase. BOA has accepted our offer, but Chase is demanding something to discharge the 2nd. How do we get these banks to call us back as they do not reply? Any help is appreciated. Thanks, Anthony.

Anthony, do you have a realtor negotiating for you or just you? I find that persistence is key. Also, I've had to escalate the matter to a supervisor. Sometimes the person you get on the phone just doesn't get it. If Chase doesn't accept the offer, then most likely they'll get nothing in the end. And something is always better than nothing. I wonder if there is a Heloc for the 2nd which is why they're being difficult.