Short sales, not such a good deal (Vinings: bank owned, real estate)

[scgraham]

Here's an article that I ran across revealing the hurdles and complexities of short sales. Unfortunately, foreclosures (http://schadenfreudenow.blogspot.com/2008/03/wsj-buyers-trashing-houses-after.html - broken link) aren't any better, in my opinion.

[bayarea-girl]

As an accountant and homeowner a short sale is still the best solution for borrowers facing foreclosure and or homeowners unable to sell their property for the original purchase price. A foreclosure stays on your record for 7 years and takes 2 years to rebuild your credit and could make it difficult to purchase in the future. With an approved short sale that gets purchased on ones credit it will state paid as agreed instead of foreclosed.

[netdragon]

I made an offer on a short sale in The Retreat at Vinings Lake before purchasing the place I have now. The problem is that the bank never responded after over a week, so I moved on.

[bayarea-girl]

Before I was considering a move to Georgia I too was going to purchase a home that was a short sale in Sacramento. Sometimes it depends on the bank and the realtor they hired but mostly the owners of the property haven't started the paperwork and this is what takes the most time. And, real estate agents are not very competent when it comes to handling the process. The seller's agent kept delaying us in order to get more offers on the table so that a higher price can be negotiated, it did take us a month & a 1/2 before we walked away (mainly because the price was going up). Short sales are a good deal if you can be patient.

[scgraham]

Originally Posted by bayarea-girl

As an accountant and homeowner a short sale is still the best solution for borrowers facing foreclosure and or homeowners unable to sell their property for the original purchase price. A foreclosure stays on your record for 7 years and takes 2 years to rebuild your credit and could make it difficult to purchase in the future. With an approved short sale that gets purchased on ones credit it will state paid as agreed instead of foreclosed.

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.

[Bette]

Originally Posted by bayarea-girl

As an accountant and homeowner a short sale is still the best solution for borrowers facing foreclosure and or homeowners unable to sell their property for the original purchase price. A foreclosure stays on your record for 7 years and takes 2 years to rebuild your credit and could make it difficult to purchase in the future. With an approved short sale that gets purchased on ones credit it will state paid as agreed instead of foreclosed.

My husband is a CPA and I agree with this poster. I have a credit background and this sounds like the right solution.

[bayarea-girl]

Scgraham, it is never a nightmare situation for a home buyer. Your real estate agent should have advised you on the process and length of time you need to put into a short sale and or foreclosed/bank owned purchase so you don't waste your time. For the purchaser you get a property for less than the market value which can be instant equity.

After reading your initial post you might have tried to purchase a foreclosed and or bank owned property which is handled differently than a short sale. With a bank owned and or foreclosed property you are dealing with the banks. With a short sale you are dealing with the buyer and their agent (so I'm not sure why you were waiting to hear from the bank on an offer). Once a buyer accepts the offer they can then present their case to their lender which can take up to 60 days (or longer) for them to approve the short sale (this depends on the lender and or state/county laws). The banks want to expedite the process so they do tend to follow through quicker than 60 days. For foreclosed and or bank owned properties the process can and does take longer (the home I was trying to buy was a foreclosed property and not a short sale situation so I'm correcting what I previously wrote). If the process is taking longer between the seller and the bank and the seller just wants to close the deal they can (you can sell your home for any amount you want to and to anyone). BUT the banks can sew the seller for the difference (so selling the place before getting approval from a bank is not the best way to go but is an option).

No matter how you look at it for the seller, purchaser, and bank a short sale is better than dealing with a foreclosed property.

[SoBuKev]

Originally Posted by bayarea-girl

For the purchaser you get a property for less than the market value which can be instant equity.

I am not quite sure that's a true statement.

[bayarea-girl]

SoBuKev, the statement is very true. If the property that is foreclosed and or being sold as a short can be equity to the purchaser because the seller and or bank is selling the property way below the home's value. When the home sells it could drive down the value of the other homes in the area, but when the market goes back up and it will go back up there is equity there. If the home is in bad condition and needs repair (which a lot of the foreclosed homes are in bad condition for some reason) once fixed up can increase the value (equity) of the home.

A lot of people in & out of CA are finding short sales (mainly investors) and are benefiting from other's loss. Investors wouldn't be purchasing homes that are in short sale if there wasn't a benefit to them (they mostly are renting them out/sitting on them until the market gets better then I'm sure they will sell high).

[scgraham]

Originally Posted by bayarea-girl

Scgraham, it is never a nightmare situation for a home buyer. Your real estate agent should have advised you on the process and length of time you need to put into a short sale and or foreclosed/bank owned purchase so you don't waste your time. For the purchaser you get a property for less than the market value which can be instant equity.

After reading your initial post you might have tried to purchase a foreclosed and or bank owned property which is handled differently than a short sale. With a bank owned and or foreclosed property you are dealing with the banks. With a short sale you are dealing with the buyer and their agent (so I'm not sure why you were waiting to hear from the bank on an offer). Once a buyer accepts the offer they can then present their case to their lender which can take up to 60 days (or longer) for them to approve the short sale (this depends on the lender and or state/county laws). The banks want to expedite the process so they do tend to follow through quicker than 60 days. For foreclosed and or bank owned properties the process can and does take longer (the home I was trying to buy was a foreclosed property and not a short sale situation so I'm correcting what I previously wrote). If the process is taking longer between the seller and the bank and the seller just wants to close the deal they can (you can sell your home for any amount you want to and to anyone). BUT the banks can sew the seller for the difference (so selling the place before getting approval from a bank is not the best way to go but is an option).

No matter how you look at it for the seller, purchaser, and bank a short sale is better than dealing with a foreclosed property.

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.