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Personally I would wait couple of months so that all of the multiple bids on a single property stops. Supply will increase base on Trustee Sales in the area. In city of Surprise there were 137 trustee sales in April which was the 12 month low but since then it has increased to 250 for the month of June which is 12 month high
Houses are too cheap on the low end. There obviously is more demand from cash buyers than supply and that will continue even when more homes hit the market. Investors think today's prices are good and can't get enough of them. There's a stampede going on to buy houses at these prices. The support price has been reached, it ain't going lower by any great amount, but it is going to go higher.
Can someone please give me a 10,000 foot view of the current short sale/foreclosure situation? I'm getting buried in the weeds ... I'm not so much interested in the 'what' (basically, takes forever, you can get bumped, etc) but rather the 'why' - what is motivating the different players (seller/bank/etc).
Obviously, the situation begins with an owner not wanting / able to make the monthly payments. So does the seller initiate the 'short sale' process, or does the bank? What is the 'intent' of the short sale, and why is it the first step before foreclosure? And why is it 'failing' - by failing, I mean, why are banks/others willing to let properties go 'through'/'past' the short-sale process and into foreclosure? Are the 'short-sale' and/or the foreclosure processes failing to address their original intent?
I've just made my first offer on a short-sale, and it has been accepted. The property sold for almost double 2 yrs ago, and there is a bigger loan on the property than the current short-sale price (around $200k vs. $150k). 'Conventional sales' in the development are 'asking' for about 30-50k more (but presumably not selling very quickly!).
Can someone please give me a 10,000 foot view of the current short sale/foreclosure situation? I'm getting buried in the weeds ... I'm not so much interested in the 'what' (basically, takes forever, you can get bumped, etc) but rather the 'why' - what is motivating the different players (seller/bank/etc).
Obviously, the situation begins with an owner not wanting / able to make the monthly payments. So does the seller initiate the 'short sale' process, or does the bank? What is the 'intent' of the short sale, and why is it the first step before foreclosure? And why is it 'failing' - by failing, I mean, why are banks/others willing to let properties go 'through'/'past' the short-sale process and into foreclosure? Are the 'short-sale' and/or the foreclosure processes failing to address their original intent?
I've just made my first offer on a short-sale, and it has been accepted. The property sold for almost double 2 yrs ago, and there is a bigger loan on the property than the current short-sale price (around $200k vs. $150k). 'Conventional sales' in the development are 'asking' for about 30-50k more (but presumably not selling very quickly!).
When the property is put on a market as a "short sale" is still owned by the seller and bank has no rights. When you made an offer on a short sale its between you and seller who signs the contract. Usually at that point banks get involved. Seller needs to present their case to banks representative that they cannot keep the house and they put it for sale and this is best offer they received. At that point bank orders an appraisal or BPO to come up with value base on comps in the area. After that they take many factors like condition of the home, number of competing active listings, net income/loss on this loan into deciding should they approve the short sale. Another factor that makes this whole process more complex is that usually banks did not use their own money for that loan and there are investors. I believe there is a lawsuit going on right now between Countrywide/BofA and some kind of investor because his complaint is that he did not approve those short sale/loan mods.
To avoid that banks sometime will decide to let the property go to Trustee sale where they lower their risk against investors because that situation is already addressed in the contract between them.
When you say you got your short sale accepted was it by a bank or a saler
When the property is put on a market as a "short sale" is still owned by the seller and bank has no rights. When you made an offer on a short sale its between you and seller who signs the contract. Usually at that point banks get involved. Seller needs to present their case to banks representative that they cannot keep the house and they put it for sale and this is best offer they received. At that point bank orders an appraisal or BPO to come up with value base on comps in the area. After that they take many factors like condition of the home, number of competing active listings, net income/loss on this loan into deciding should they approve the short sale. Another factor that makes this whole process more complex is that usually banks did not use their own money for that loan and there are investors. I believe there is a lawsuit going on right now between Countrywide/BofA and some kind of investor because his complaint is that he did not approve those short sale/loan mods.
To avoid that banks sometime will decide to let the property go to Trustee sale where they lower their risk against investors because that situation is already addressed in the contract between them.
When you say you got your short sale accepted was it by a bank or a saler
Thanks for the info; that helps. My offer was accepted by the seller; 'Bank Acceptance' is the next step, I believe, and that is the part that can take forever.
So - Banks have a legal mechanism to pass on the loss to investors in the form of a foreclosure, and that legal mechanism does not apply if they just 'accept' a short-sale agreement from the current owner. So they go through a longer process, and potentially get less money, but avoid exposure to lawsuits - is that part of the issue?
Thanks for the info; that helps. My offer was accepted by the seller; 'Bank Acceptance' is the next step, I believe, and that is the part that can take forever.
So - Banks have a legal mechanism to pass on the loss to investors in the form of a foreclosure, and that legal mechanism does not apply if they just 'accept' a short-sale agreement from the current owner. So they go through a longer process, and potentially get less money, but avoid exposure to lawsuits - is that part of the issue?
you can find some info on the lawsuit on this site http://www.graisellsworth.com/press.html (broken link)
I fully agree I much rather go to auction (which I hate but that's a topic for another time) today rather than trying to make an offer in this stupid market. At auction at least I know what my competition is willing to pay.
Yes the Real Estate Industry cries out for strict regulation and heaavy criminal penalties
Thanks for the info; that helps. My offer was accepted by the seller; 'Bank Acceptance' is the next step, I believe, and that is the part that can take forever.
So - Banks have a legal mechanism to pass on the loss to investors in the form of a foreclosure, and that legal mechanism does not apply if they just 'accept' a short-sale agreement from the current owner. So they go through a longer process, and potentially get less money, but avoid exposure to lawsuits - is that part of the issue?
good luck, i don't think acceptance from a seller means anything. bank acceptance is the key...and if there is a second mortgage, and the 2 banks are trying to settle over that...it can be a complete waste of time.
i'd stick to bank-owned. i wouldn't tie any money up while this offer is on the table. i would continue to look for other properties while this process goes on.
good luck, i don't think acceptance from a seller means anything. bank acceptance is the key...and if there is a second mortgage, and the 2 banks are trying to settle over that...it can be a complete waste of time.
i'd stick to bank-owned. i wouldn't tie any money up while this offer is on the table. i would continue to look for other properties while this process goes on.
I believe there ARE two mortgages involved . I have no money tied up; there is no requirement for EMD until Bank acceptance.
What I'm trying to understand is, who is motivated by what. Is it true to say, at the moment (short-sale process) the seller is trying to find a solution to his problem, and the Bank may be indifferent to the Sellers efforts? But the bank is presumably not getting any monthly payments, so has some incentive to cooperate - no? Or is the bank simply watching the clock, waiting for the legally required number of days (missed payments) before they move to take possession and then, sell the property themselves?
Is it true to say - 'foreclosure' is the process by which a property becomes 'bank owned', and when you talk about 'buying a foreclosure', you are buying a bank-owned property that has gone through the foreclosure process - that is, 'bank owned' and 'foreclosure' are somewhat interchangeable in this context? Are auctions simply one of many ways to dispose of bank owned properties - that is, a bank may choose to 'list' a property it owns in a conventional manner through a realtor), or, it may choose to put the property up for auction - presumably to reduce costs and speed the process?
"Is it true to say - 'foreclosure' is the process by which a property becomes 'bank owned', and when you talk about 'buying a foreclosure', you are buying a bank-owned property that has gone through the foreclosure process - that is, 'bank owned' and 'foreclosure' are somewhat interchangeable in this context?"
I can't give a technical definition, but as far as I understand it, what you said true. I would add that "bank-owned" would mean that a house has gone through the entire foreclosure process.
I believe there ARE two mortgages involved . I have no money tied up; there is no requirement for EMD until Bank acceptance.
What I'm trying to understand is, who is motivated by what. Is it true to say, at the moment (short-sale process) the seller is trying to find a solution to his problem, and the Bank may be indifferent to the Sellers efforts? But the bank is presumably not getting any monthly payments, so has some incentive to cooperate - no? Or is the bank simply watching the clock, waiting for the legally required number of days (missed payments) before they move to take possession and then, sell the property themselves?
Is it true to say - 'foreclosure' is the process by which a property becomes 'bank owned', and when you talk about 'buying a foreclosure', you are buying a bank-owned property that has gone through the foreclosure process - that is, 'bank owned' and 'foreclosure' are somewhat interchangeable in this context? Are auctions simply one of many ways to dispose of bank owned properties - that is, a bank may choose to 'list' a property it owns in a conventional manner through a realtor), or, it may choose to put the property up for auction - presumably to reduce costs and speed the process?
Thanks!
In AZ, when an owner is 3 months in arrears on their mortgage payment, the bank instructs the Trustee to issue a NOTS (Notice of Trustee Sale) to the owner, and files it with the county recorder. That notice sets the 90 day time frame and the Trusee schedules a Foreclosure Sale date 90 days out. Everything during this 90 day window is called Pre-Foreclosure.
During that time a Short Sale can be negotiated with the bank, which they may or may not accept. It's called a short sale because the bank is asked to accept an amount of money short of what is owed on the loan.
The bank sets a minimum bid price for the Foreclosure Sale, which is held either at the Trustee's office, or on the court house steps. The majority of the prices are set higher than bidders are willing to pay, so the bank buys the property back. When the bank buys it back, it is in the Post-foreclosure process. The bank doesn't pay any money for the house; they just take title, but it's called buying it back.
Now the property is in post-foreclosure and the bank gets it transferred to their REO (real estated owned) department, and prepares to get it sold on the mls, (or through bulk sales to large investors) as an REO (bank owned property).
So there are three stages of foreclosure.
After NOTS it is in Pre-foreclosure
At the Trustree sale, this is the Foreclosure
If it isn't sold, and the bank takes it back as an REO, then this is the Post-foreclosure period.
People just use the term "foreclosure" to describe a house in any of those stages.
The banks do not sell properties on their own. They are prohibited from being in the real estate business.
They can, and do, bundle large quantities of houses and sell them to large investors in the $5+ million dollar range.
They will sell the individual homes either through their own department or through a servicing company. They always use a Realtor to sell the individual homes.
Some banks have a web site where you can find their bank owned properties that are on the market, but you will be directed to the Realtor who has it listed to make a purchase. That's really the hard way to find them.
The best way is to have your realtor set up a search for bank owned, or short sales in the area and price range you want, and these listings will be sent to you automatically, every day if you choose.
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. I have no money tied up; there is no requirement for EMD until Bank acceptance. 
