Short sales, not such a good deal (foreclosure, loan)

[bayarea-girl]

Scgraham, what I am saying doesn't defy what the Wallstreet Journal wrote. The problem with their article is that they too are confusing the short sale process with the foreclosure process. I've had clients and friends go through this process and I myself tried to purchase a home from a bank so I am pretty clear on the process. My mother is a pretty savvy real estate investor so I've seen how she is able to wheel and deal. The problem today with the short sales/foreclosed homes is that there are not enough competent people handling the process as the article states.

I hope you don't believe everything you read and investigate further before you make opinions even if its written by the Wall Street Journal.

[bayarea-girl]

Just wanted to also add, where are you getting 4-5% chance of closing. Please re-read your article. And actually what I wrote truly agrees with the article any ways. Short sales are a win win for every one and since lenders are improving the way the handle short sales, I believe it shouldn't be a problem closing on a short sale.

[scgraham]

Originally Posted by bayarea-girl

Just wanted to also add, where are you getting 4-5% chance of closing. Please re-read your article. And actually what I wrote truly agrees with the article any ways. Short sales are a win win for every one and since lenders are improving the way the handle short sales, I believe it shouldn't be a problem closing on a short sale.

Per the article, Redfin (a real estate company) made 65 offers on short sales and only 3 might close. At best, that is a 4.6% success rate -- and these are savvy buyers too; most buyers are not going to sit around for months hoping that banks will approve the sale. What's more, during this timeframe, the lender(s) are trying to see if the seller has done everything possible to avert such a sale -- and this is all on the buyer's watch. Obviously, those lenders do not want these sellers of short-sales to take the easy road out of a financial jam. All too often, there are other alternatives for these sellers to work out a repayment plan in lieu of a short sale that forgives the debt.

[bayarea-girl]

Scgraham, I believe you are reading more into the article and I agree to disagree with you about the 4.6% success rate. The Redfin blog & or story has nothing to do with the Wall Street article (and they weren't referring to short sales but foreclosures). I wish others that have been threw the process and or a realtor/lender could provide more informed information. If a home purchase is a good enough deal for a purchaser they will be willing to wait. Once I move to Georgia I plan on purchasing a home that is in a short sale and or foreclosed status as I realize the benefits (I'll probably wait until the end of this year and or early next year to purchase as I don't believe we have seen the worst of the storm).

[bayarea-girl]

Oh, my last comment is it always takes more time (especially in today's market) to purchase a home. 30-45 days use to be the norm time frame for a loan to close unless you have cash, but now loans aren't even being approved. And, once a loan is approved the lender might have changed its lending practices and declines the loan or reduces the amount a borrower can get or the might just stop offering the loans all together. To be approved for a loan can take a lot of time right now. So every one will have to sit and wait and be very patient. You've always got to look at things from all view points.

[scgraham]

Originally Posted by bayarea-girl

Scgraham, I believe you are reading more into the article and I agree to disagree with you about the 4.6% success rate. The Redfin blog & or story has nothing to do with the Wall Street article (and they weren't referring to short sales but foreclosures). I wish others that have been threw the process and or a realtor/lender could provide more informed information. If a home purchase is a good enough deal for a purchaser they will be willing to wait. Once I move to Georgia I plan on purchasing a home that is in a short sale and or foreclosed status as I realize the benefits (I'll probably wait until the end of this year and or early next year to purchase as I don't believe we have seen the worst of the storm).

Bay girl, I am perplexed at your insistence that the article isn't about short sales. The title of the article is:
"Why Lenders Are Leery Of Short Sales"

"As more people fall behind on their mortgages, lenders have been slow to take advantage of a longstanding alternative to foreclosure -- a so-called short sale.

At first glance, a short sale might seem like a win-win for everyone involved..." "Many borrowers walk away in frustration because it takes so long to get a response from the mortgage company to their offer...."


Anyway, I will let the reader of the article determine his/her own interpretation.

Best!

[scgraham]

Originally Posted by scgraham

Bay area-girl, your post defies what the Walstreet Journal wrote on this subject. A buyer has about a 4-5% chance of actually closing on a short sale deal.

In theory, your post makes sense, but it is not reality.

I want to clarify: the article alluded to one brokerage firm having a 20% success rate while the other had about a 4.6% success rate. Nonetheless, it is a "shot-in-the-dark".

[bayarea-girl]

What I was trying to help you understand is the difference between short sales and foreclosures. The article which is entitled "Why Lenders Are Leery of Short Sales" also goes over foreclosures. That is what can confuse others (the terms are interchanged and there is a significant difference between the to and how they get handled) and the part where I disagree with you on is that you are reading more into the article than is stated and that short sales are a bad experience for purchasers. Any ways we can agree to disagree.

[scgraham]

A quote from yet another article from the WSJ.com:

"Homeowners hoping to avoid a foreclosure are adding to downward pressure on the market, says Daniel R. Odio, owner of DROdio Real Estate Inc. in Alexandria, Va. Such people often seek to unload their homes through a "short sale," in which the price is less than the amount owed on the mortgage and the lender agrees to forgive the difference. Homeowners hoping to do a short sale sometimes advertise very low asking prices to lure buyers, even if there is little chance the lender would accept bids at that level, Mr. Odio says. The "fictional" asking price, in turn, misleads potential buyers about the value of nearby homes."

[Scraper Enthusiast]

Originally Posted by scgraham

Exactly. It might be good for the seller, but it is a potential nightmare for a buyer. I don’t know of many buyers who will wait 3 months for a shot-in-the-dark.

My friend bought a foreclosure/bank-owned property. He had to wait about three months from the time he made an offer to the time he moved in, but it was worth it, he said. Apparently, he made a lot of money on the deal from the built-in equity from the start. Patience paid off for him.