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Hello All,
Very worried I'm going to be sitting here for 4 months just to get shut down for the bid.
That's very likely if the offer is well below bank's #, or you may get a counteroffer.
My recent shortsale took 3.5 months, 3 months of waiting involving weekly calls to chase up the realtor (who was chasing up the bank). Then it was a mad dash to close since the damn bank only gave us <4 weeks to close. Ended up doing all cash since there was no time to go through the mortgage process in this climate.
My offer was 20% below true market value, and the accepted price was 10% LESS than my offer price (of course i didnt complain heh). So ended up getting a nice unit at 30% below market, rented out 2 days after i closed.
So there are good deals to be had with shortsale, but it needs to satisfy a few criteria first to worth your time:
1) The realistic "full offer" price needs to be at least 10%+ below true market
2) The shortsale must only have 1 lien (1 loan) against it, if it has more than 1 just walk away, the listing agent can tell you that info.
3) The listing agent (the one who will be dealing with the bank) must be experienced at shortsale, ask them if the seller has the distress package ready to go, which bank is the lien holder, and how much money is owed to the bank on the seller's mortgage. If the realtor doesnt have a clue, dont bother.
4) Your timeframe must be very flexible, <4 month wait is very good, ~6month is average.
5) Make sure you have a clause in your contract that let you walk away after x months if the deal is still not approved and you will get a full refund on the deposit.
Short Sales are going much smoother than they had in the past. If the bank is participating in the HAFA program (not all banks are participating) than they are required to give an approval/denial within 30 days of reciept of the hardship. Many banks are allowing listing agents to provide the short sale package prior to having a contract which helps get things moving quicker.
We have been very successful at closing short sales but it does depend on the banks involved. It is extremely important to have a listing agent on the property that is well versed in short sales. Also a buyers agent that is familiar with short sales is extremely important so they can make sure that you as the buyer understands the entire process. Communication is key!
There are still situations where surprises pop up and things do not go through after a buyer/seller has waited a significant amount of time or the home goes into foreclosure anyway.
Just closed on mine. Put my bid in July of 2010 and closed December 2010. For us, it was worth the wait. I didn't get a phenomenal deal off the price, but I did get the house of my dreams.
I put a bid on a short sale back in November. I bid around $9K under list price plus asked for closing costs (list price had already been reduced a few times but no takers). Supposedly there was another offer right after mine which I didn't really believe, so I only increased my offer by $2K and the sellers accepted mine. This led me to believe I was being lied to about the 2nd offer but that's another story.
I thought it was a sure thing, and only waited 2 weeks before hearing anything from the bank. The bank had it appraised and the appraisal came back much higher than my offer so the bank would not approve the sale. Their response was that they would get more money if it went into foreclosure since they had insurance for foreclosures. They wanted $20K more than I offered (although I never got an official counteroffer).
It wasn't worth it to me, so I walked. The house is still for sale at a higher list price. I'm now under contract on a different house - a foreclosure. For this one I got a response from that bank in 24 hours.
We put an offer in Nov 15th, accepted by the seller Nov 17th sent to the bank and we are still waiting. Apparently the bank sent an appraiser out to the property a couple weeks ago but there has been no word from the bank or the appraiser. The house is still listed as active, regular sale. We are just waiting.
We messed with short sales and REO's but in the end we bought the house that we really liked and it was a regular sale. Just too much things going on from my experience. It's definitely not for everyone.
How do you know when the sellers submit your offer (along with other short sell application material) to the bank?
Do you just take their word or is it reasonable to tell them to show a proof of receipt from the bank?
The listing agent(seller) will tell you, of course if you dont trust them you can ask for evidence (fax receipt etc..) the paperwork has been submitted. But that usually doesn't go too well with the agent, and most times they have no reason to lie to you, so word of mouth from the agent is usually good enough for me.
hence the importance of finding a good experienced agent for shortsale, as oppose to regular deals where they serve mostly as a telephone between you and the seller.
mouth from the agent is usually good enough for me. ... hence the importance of finding a good experienced agent for shortsale, as oppose to regular deals where they serve mostly as a telephone between you and the seller.
I'm ok with my agent (Buyer Agent) as she is indeed just a go between and there really isn't anything she can do beside making the emails and phone calls as I ask.
However, the seller's agent (who I have no control over) hardly answers anything and when he does, in short bursts, not providing any details, what's going on, etc. It has taken 2 weeks just to accept my offer, and they missed signing 1 doc. So it's like pulling teeth to get him to get me the missing signature and to tell us whether the sellers have prepared the docs for short sale application, and even what their attorney's name/phone is.... All this just says to me that I can't trust his word (which hasn't been forthcoming anyway).
I got mine on August, I had to wait around 2 months... but all the time I felt things were moving along... slowly but moving, I've heard horror stories but in our case things were very smooth.
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