who comes up with SHORT SALE pricing? (foreclosure, insurance)
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Because everyone wants in on the short sale market and agents don't know what they are doing. If its an FHA short or VA usually the bank is not going to accept less than a certain percentage when it first comes on the market, so the price should reflect this.
Generally the listing agent comes up with the price, it should be low enough to get offers but not low enough to waste peoples time. Plus if its a second home or investment property the owner is going to get 1099'd for the short, which should be taken into consideration for your owners fiduciary protection. Yes if the loan is insured the bank will have insurance for a certain amount. This is why these loans typically "cost" more to the consumer, they are more risky and thus more costly, this is why they are paying PMI.
Yes let the buyer beware still rules, even when it comes to loans. I know variable rates sound good upfront, but they are variable. I was scared of these things even before the boom. No way. Too much like gambling for me. If your home changes escrow or readjusts, I'm sure it was in the paperwork and legal, yes?
I had a short sale take 6 months to close once under contract.
Mares I'm sorry to hear about that. Alot of people are getting hit with Adjustables. However yes, Michigans market is generally one of the worse nationally. There are some reports that there will be another wave of foreclosures due to 5 year ARMS not being able to refi. This may be worse than the last wave. The math, 2005-2006 plus 5 years...
Skycrane, there are benefits to shortselling but if you're in a bad market it may be a tough wait. In our market, upstate SC, we are holding decently. Down overall, but nowhere near as bad as MI or FL or parts of CA, ETC. The key is making sure your clients knows what to expect upfront. Banks generally don't make repairs, short sale or foreclosure. This shouldn't be expected and offer price should come in with that in mind, and any rehab costs in mind. Thus, if the home is not in A quality, a contractor or someone knowledgeable should be contacted before offering. If the contract is made contingent upon inspections, this is the time you can back out or ask for a lower price or whatever change in terms, regardless of addenda(unless the addendum makes you bypass an inspection period which would be foolish and I've never heard of), if the bank comes back later and asks for a higher price its a counter offer and can be rejected by the buyer.
Banks don't want to foreclose and would rather do a short, unless the numbers don't add up. It's usually more than $20,000 of cost per foreclosure for a bank.
Last edited by GreatGreenvilleGuy; 06-02-2010 at 12:40 PM..
thanks for the response Greatgreenvilleguy. Are banks more receptive to short sales now? What about when you have two loans? Whats the odds of closing when there's two loans on the short sale?
thanks for the response Greatgreenvilleguy. Are banks more receptive to short sales now? What about when you have two loans? Whats the odds of closing when there's two loans on the short sale?
I would say that the banks are never going to be "receptive" to short sales but they are now more apt to face the reality of the current market conditions and with new government guidelines being implemented to speed up the time frame a bank has to consider a short sale offer, processing times are and will get shorter. The thing that makes the process slow is the sheer number of current and future short sales and that the banks can't be expected to hire even more people to process these transactions now, because eventually they will have to reduce their workforce when this mess finally works itself out. Also, of course they are obviously in business to make money, so the bank will still only accept the highest net dollar amount they can possibly get within a certain time frame that only the bank knows about.
As far as having 2 loans, difficult but not impossible. Also if you have PMI, even more difficult to get all parties to agree to the short sale but again, not impossible.
Just a note about the best and worst scenarios from my short sale experience. I represented the buyer and from offer date to closing was 60 days. I represented the seller of one property and it took almost 9 months to close because there were judgement liens and other issues to deal with. I also know of other short sale transactions that have happened in less than 60 days and in more than 9 months. Every single transaction is unique, and you need to as they say, "expect the worst and hope for the best."
because the banks take many man-hours and months of elapsed time to assess a short sale. They're not going to go to that trouble unless there's an offer on the table.
I think the banks just have so much volume and inventory right now that they can't go any faster. I also think that in some cases they're making miscalculations as well. We had an offer on a short sale that had 2 liens. The first accepted, the 2nd did not (same bank ironically), and now it is going to auction starting at about 58% of what our offer was. Crazy.
We have an amazing end to our short sale story- Our dream home that the bank had refused to agree on our offer went to auction this week. Our realtor went to the auction on our behalf and won the property at about 62% of what our offer had been! We are still in shock that this beautiful home is ours. Someone at the bank should be fired for losing that much money! I wonder if I should send flowers?
We have an amazing end to our short sale story- Our dream home that the bank had refused to agree on our offer went to auction this week. Our realtor went to the auction on our behalf and won the property at about 62% of what our offer had been! We are still in shock that this beautiful home is ours. Someone at the bank should be fired for losing that much money! I wonder if I should send flowers?
They may not have lost as much as you think. They may have recovered some from the PMI (mortgage insurance). Anyway, congratulations!
We have an amazing end to our short sale story- Our dream home that the bank had refused to agree on our offer went to auction this week. Our realtor went to the auction on our behalf and won the property at about 62% of what our offer had been! We are still in shock that this beautiful home is ours. Someone at the bank should be fired for losing that much money! I wonder if I should send flowers?
how long did the whole process take? Why did it go to auction and not back on the MLS? What was the reasoning for not accepting your offer?
how long did the whole process take? Why did it go to auction and not back on the MLS? What was the reasoning for not accepting your offer?
It went to auction (trustee sale) as part of the foreclosure process. If the bank had taken it back at the trustee sale, then the bank would have eventually put it up for sale through the MLS. Instead, Zathras bought it directly at the trustee sale.
Are there alot of houses selling at the trustee sale for 60% off the list price? I don't see huge savings like that anywhere on the MLS when the bank goes to sell them. Why would they accept such a huge loss on a house when they can list it for much more?
Are there alot of houses selling at the trustee sale for 60% off the list price? I don't see huge savings like that anywhere on the MLS when the bank goes to sell them. Why would they accept such a huge loss on a house when they can list it for much more?
There is no "list price" at a trustee sale. the initial asking price is usually for the amount of the outstanding mortgage balance. Since that balance is usually more than the home's market value, the bank ends up taking it back. In some cases, such as discussed here, the opening bid is below market value, and someone may get a great deal.
Most banks have separate departments that handle short sale negotiations and foreclosure proceedings. In this case, they apparently weren't communicating and possibly lost an opportunity to make more money by short selling to Zathras. How much they lost (or not) depends if they got some reimbursement through mortgage insurance.
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