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I was in Carolina Beach over the weekend and saw a short sale listing for 350 k. The tax value is over 720k and the owners owe the bank around 620k (forclosure papers where stapled to the door). It seams to me that the bank would be unwilling to take a 270k hit and that pursuing this short sale would be a monumental waste of time. Any thoughts?
Watched a bunch of home shoes last night trying to win some points (and as usual failed). I talked a lot to my wife about short sales. Something I must not understand, but it does seem like in most cases something (short sale) is better than bankruptcy and then how long to get any money out.
I expect you need to know a lot more about these sales than the average guy does to win consistently.
That is a big " hit" for the bank, but in this current market they have so many properties that they are accepting these low offers. If it is a short sale, many times the owner has to take back a 1099 for the difference and pay taxes on that. This is negotiated with the bank. If it is already in foreclosure and owned by the bank, and listed at 350 K, then that is what they are saying they will accept. Good opportunity for buyers now, not good for owners or banks...but that is where we are right now. Yhere is such a huge inventory of foreclosures and short sale properties now. As to tax values, they were set at the top of the market a few years ago and have not much to do with " market values" of today....unfortunately.
That is a big " hit" for the bank, but in this current market they have so many properties that they are accepting these low offers. If it is a short sale, many times the owner has to take back a 1099 for the difference and pay taxes on that. This is negotiated with the bank. If it is already in foreclosure and owned by the bank, and listed at 350 K, then that is what they are saying they will accept. Good opportunity for buyers now, not good for owners or banks...but that is where we are right now. Yhere is such a huge inventory of foreclosures and short sale properties now. As to tax values, they were set at the top of the market a few years ago and have not much to do with " market values" of today....unfortunately.
Sgoines is absolutely correct, the current tax values were assessed at the top of the market, and bear no relevance to the current market values of homes TODAY. Short sales are tedious and take months, so if you are a BUYER looking to purchase a short sale, you will have to have tons of time and patience.
Banks would rather take a hit, than lose all.
Foreclosures, are a done deal. Banks will price, then continue to reduce, until the price is reflective of the market and what Buyers will pay.
Remember, property will only sell if it is reflective of the current market.
Eventually the market will stabilize, and prices will be more realistic, or in line.
As a Buyer or Investor, foreclosures are a great deal, and unfortunetly they are a reflection of our times.
Banks are overwhelmed right now with foreclosures, they have established departments just to deal with them, and have streamlined the process somewhat. Purchasing a foreclosure is very different than purchasing retail, as there are guidelines set forth by the BANK, that Buyers must adhere to. Choose your Realtor carefully when considering a foreclosure, it will make the process much smoother if they are experienced with the process.
I might add that sometimes a short sale will generate multiple offers, and if the bank is lucky that way, the cost to buy will creep up if several buyers really want the property. Such a bidding war might end with the house going for a significantly higher price than originally offered. This is not always the case, but just be aware. And Seashell is giving you great advice about having an experienced real estate attorney who knows how to handle all this stuff.
I was in Carolina Beach over the weekend and saw a short sale listing for 350 k. The tax value is over 720k and the owners owe the bank around 620k (forclosure papers where stapled to the door). It seams to me that the bank would be unwilling to take a 270k hit and that pursuing this short sale would be a monumental waste of time. Any thoughts?
If the property is listed for $350,000, why would you assume the bank would be unwilling to sell it for that price? After all that IS the list price right? Once a property enters a distress status (short sale or foreclosure), the bank's primary interest is disposal with a lot less emphasis on price than you might think. A prime example is the Summerhouse subdivision in Holly Ridge where lots that transferred for $140,000 to $460,000 less than two years ago are being liquidated by the banks for $15,000 to $20,000.
And the others on here that warned about the tax value are right. Paying attention to the tax value is an excellent way to over pay for a piece of real estate. In all honesty, the $350,000 asking price may be too high for the market and not a bargain at all.
That is correct...so if the property isn't selling ( pretty quickly) at the listed price....then one would assume it is overpriced for THIS market. And the bank would more than likely be happy to take that listed price. So buyers considering a property like this can "make an offer" and do well if they find something they like. The short sale process is long and does require patience on the part of the buyer, but not always. It depends on the bank and who your realtor's contact is, etc. Some have gone well...banks are learning that they must go ahead and liquidate these properties now and are getting more experienced at it in some cases.
Excellent advice above. I just wanted to add a bit of flavor from the banker/lender perspective. The mortgagee is looking for the best way out--they're in business to make money by lending, not by buying and selling houses--so the quicker they can convert a mortgage to cash the better.
Foreclosure is a long, expensive process for the mortgagee. And after its done, they still have to go to the trouble and expense of preparing the property for sale, listing the property, and closing once it's sold, not to mention maintenance and other carrying costs while the property is listed (which could be a very long time). So yes, lenders are usually very agreeable to short sales at ridiculous prices. They get (some) cash in hand, and get rid of the risk and uncertainty of the foreclosure/liquidation process. And there is usually room to negotiate even lower than the "listed" price, especially if the house has been on the market for a while.
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