Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
We just put in an offer on a short sale...House is looking a little run down plus needs a bit of yard work done...we have VA loan approval in hand...Sellers moved out over 15 months ago...Any advice for a newbie?
If your offer goes thru as hoped, then congratulations to you.
But as a former CA short sale listing broker & negotiator...I see several potential red flags.
You're trying to buy a vacant distressed short sale property with a VA loan.
You already admit the property needs work, & the sellers abandoned the property long ago.
It's highly unlikely the sellers will be willing, or able, to pay for any needed repairs.
Most banks insist on selling a short sale As Is.
The VA loan appraisal is likely top spell out numerous repair items that you the buyer are not allowed to to handle.
Most banks are not going to make any repairs on a short sale that is still in the sellers' name. Once it becomes REO, then the bank might very well pay to bring the property back up to financeable condition.
Unless the investor behind the note is absolutely desperate to get out from underneath...I envision a potential stalemate, which would push the property into foreclosure, for the reasons stated above.
If it all comes together in the end...we'll all be happy for you.
But if I'd been the listing broker, I'd have advised to sellers to keep looking for a buyer more capable of purchasing an As Is property.
If I'd been your buyer side broker, I'd have advised you to find an REO that's already been rehabbed.
Good luck to you, & please keep us updated on how this all pans out.
If your offer goes thru as hoped, then congratulations to you.
But as a former CA short sale listing broker & negotiator...I see several potential red flags.
You're trying to buy a vacant distressed short sale property with a VA loan.
You already admit the property needs work, & the sellers abandoned the property long ago ...
e keep us updated on how this all pans out.
Thanks.
When I say needs work, it's cosmetic like appliances don't match, counter tops and cabinets are builder grade, oh and horrible paint colors on the first floor. We've had two realtors walk through with us and nothing came up with red flags that might cause a problem with a VA inspection. I specifically asked about that as I know the VA is a little more picky.
The house is habitable as is, but in this market outside of the DC area what they were asking buyers expected more updates kitchens, matching appliances kind of thing. It's in a really good neighborhood with low HOA fees and generally a convenient location for this burb.
We just put in an offer on a short sale and thought I would join in the waiting club here.
Price history of home:
12/1/2015 Price change $310,000
11/17/15 Price change $319,000
10/24/15 Price change $329,999
10/16/15 Price change $335,000
08/25/15 Pending sale $299,999
07/29/15 Price change $299,999
07/24/15 Price change $309,777
07/09/15 Price change $315,777
06/27/15 Price change $329,000
06/17/15 Price change $339,000
01/13/15 Price change $349,000
12/01/14 Listed for sale $359,000
03/06/08 Listing removed $420,000
09/16/07 Listed for sale $420,000
04/28/03 Sold. $295,000
House has a good size but is looking a little run down plus
needs a bit of yard work done. It's listed as a short sale but our
agent was told the previous bank wanted $335,000 for the house.
They stated their (bank) appraisal came back for $335,000.
A few weeks ago, that lender sold the lien to another lender.
Not sure what that means but hope it's more short sale friendly
than the last lender.
At our agent's suggestion, on 2/12/16 we offered $300,000 with 3%
towards closing. Already have VA loan approval in hand with
expiration date of 5/21/16.
Our agent was told by the listing agent that listing agent agrees home
is worth about our offer price. Sellers moved out over 15 months ago,
and I was told they are eager to get this behind them. At this point I do
not know if there is more than one mortgage.
Any advice for a newbie?
Quoting myself. Realtor called to relay that selling agent has net sheet price as $310,000. We agreed to the higher price, it's still a good price for the size of the home in this area.
12/11 Offer submitted for 278k + 1% atty fee
12/17 Offer accepted
12/18 Sign BofA non affiliated paperwork
12/19 Agent has list of paperwork to fill out at the ready as the seller's agent stated the short sale ahould be quicker.
12/21 Waiting on bank.
Update 1:
1/4/2016 - Lots of updates today. My agent sent me a form that had a misspelling to initial next to the correction. Also received appraisal which came in 2k over my offer price (thankfully). Lender informed me I was approved through underwriting and requested two more forms (401k documentation for withdrawl and hazard/flood insurance information). The lender stated once bank approves offer they will be immediately go full steam ahead.
Rate this post positively
Update 2:
1/11/2016 Bank countered for 2k above to make it 280k which is our appraisal price. It also happened to be the highest we would go. Accepted offer and just sent over paperwork. Our agent also threw in language on 3 small items that must be fixed prior to the appraisal being valid (electrical wall plate, broken fence board, and a trim piece that has to be replaced). Our agent talked with the seller and they seem willing to fix those things to get this finalized. Will know before 5:00pm PST about how these will be fixed.
Update 3:
1/18/2016 - Bank replied and stated no credit and 280k is the price. Signed acceptance and signed addendum.
1/20/2016 - Signed another addendum removing credit request. Agent told me now we just sit and wait. Waiting does suck. The worst part is I am free to look at other properties and I can cancel my contract if I want (agent said I literally could find my dream house and send an offer). But the sad reality is no other house comes close to what this offers (no hoa, nice design, dual/seperate master bath sinks). The outside is perfect and has a lemon tree. There has only been one other property for about 300k that I had interest in but it had a smaller backyard. It did have 100 more sq ft... but it seemed to be the only positive. It had terrible carpet colors and bright paint so we'd have to drop another 10k into it to change those as I cant stand it. The current one I am waiting on needs carpet and paint but is priced at that point. We are really not wanting to go over 290k for our loan.
Update 4:
1/26/2016 - Agent told me late in the evening that he talked with seller agent and negotiator stated approval "coming soon". Not sure if that means days or weeks sadly. But we did get to see the house again. Imagined all the upgrades we would make.... and reminded us why it is worth it to wait.
Update 5:
1/28/2016 - Agent calls me with good and bad news. The good news is BofA approved the short sale. Bad news was there is a 2nd on the house. My agent told me he confirmed that he and the lender asked about any other issues or loans that may be on the house. He shared the disgust for me and for the shady nature of the non-disclosure to the seller's agent. So, if this falls through... not sure of what legal steps that I possibly could have but the seller's agent should have disclosed it as it's been listed/buyer process multiple times. Very frustrating... however, my agent told me he still feels good about the transaction that the seller's agent knows her stuff and has sold a lot of short sale properties.
2/1/2016 - Got permission from seller's agent to perform fixes required by my appraisal for it to be valid. Fixes only took an hour. Most of the time was going to Home Depot to get color matched paint for the small items I had to fix on the exterior. Re-appraisal was ordered and should be done by the end of the week.
2/2/2016 - In a holding pattern again until we here back from the 2nd (Citi). The 1st approval has about 45 days left until it expires. My lender stated they are on track to close in about 25 days once we get the 2nd approval so it gives these guys about 3 weeks to get the nod from Citi. Not sure how the 2nd mortgage issue works out with the banks/seller side if anyone has info to provide. Still looking at other property but nothing comes close to this house in the area I want.
2/9/2016 - Got reappraisal back and it's solid. Apprasial is good for the 280k.
2/10/2016 - Got a notice that the 2nd approval was given but I guess Citi lives in the stone age where they only send out approvals via regular US mail? So apparently once the hard copy arrives to the seller we are officially good to go. Agent setup inspection for 2/18/2016 (pest and home inspection both occur that day). Loan people were given the nod by my agent for this information and they stated once the hard copy is in hand they will have a firm date for closing and said my file is golden and ready for action. My agent said its about a 99% deal but having the hard copy approval in hand is paramount so he doesn't like saying it will happen at 100% until its in hand. But this is the best news. The market is really on fire right now too so prices are going wild here and I'd love this to close as we would get instant equity not including the flooring/paint/upgrades we already are getting in motion.
Update 6
2/16/2016 - Postponed inspections as we still don't have the 2nd approval hard copy. We have continued to look for properties and I feel like we will end up settling for less and paying more. Honestly, if the seller's agent was up front about the 2nd we would have been way more understanding about the time frame. Instead, now we doubt they actually got the approval from Citi and are just stringing us along... my agent still thinks it will get done because the seller's agent (he reiterated) has done a lot of short sales. He said if we can get the letter before 2/26, he thinks the lender will close before the 1st approval expires on 3/15.
2/19/2016 - Still haven't seen the letter. Hoping it magically appears today but we will be heading into the week ahead still waiting. Houses are selling for about 5k over asking and, really, these houses we continue to see are terrible haha. It's no wonder they are selling.... So I sit here Friday morning hoping for a phone call from my agent telling me we have the 2nd approval letter.
2/16/2016 - Postponed inspections as we still don't have the 2nd approval hard copy. We have continued to look for properties and I feel like we will end up settling for less and paying more. Honestly, if the seller's agent was up front about the 2nd we would have been way more understanding about the time frame. Instead, now we doubt they actually got the approval from Citi and are just stringing us along... my agent still thinks it will get done because the seller's agent (he reiterated) has done a lot of short sales. He said if we can get the letter before 2/26, he thinks the lender will close before the 1st approval expires on 3/15.
2/19/2016 - Still haven't seen the letter. Hoping it magically appears today but we will be heading into the week ahead still waiting. Houses are selling for about 5k over asking and, really, these houses we continue to see are terrible haha. It's no wonder they are selling.... So I sit here Friday morning hoping for a phone call from my agent telling me we have the 2nd approval letter.
In almost every successful short sale transaction where there was a 2nd lien holder, & I was the listing broker & negotiator, I always tried to obtain short sale approval from the 2nd lien holder first, & then push harder for the 1st mortgage approval, with the 2nd lien holder approval letter in hand.
In your case, the 2nd lien holder is now, more than ever, in spoiler position. They know the 1st lien holder wants the deal, & so are in a position to demand more $ than the 1st may be offering. If the 1st doesn't agree, the 2nd can now make the 1st swallow a foreclosure later down the road, instead of cutting their losses thru the short sale, now.
And I've seen that happen. Rival banks have definitely been known to almost exact 'revenge' on each other, even with a strong fair market value purchase offer in hand. It really depends on exactly how high a % the 1st is offering the 2nd.
Depending on your state laws, & the seller's financial condition, the 2nd may decide they'd rather go after the defaulted seller seeking a deficiency judgment down the line rather than accept pennies on the dollar, now. Remember...the 2nd mortgage also has studied the sellers' financials closely.
If the 1st is offering 6%...the 2nd may agree. If the 1st is only offering 2%...the 2nd may tell them to go pound sand.
There's a lot more to a successful short sale than simply the strength of the new buyer's purchase offer.
I have been following this thread for months while waiting for my own short sale to go through. I finally closed a month ago, so I wanted to post my timeline to give hope to others. There were several times I almost gave up (see what happened on 11/15!) But I stuck with it because I knew I'd found the home for me.
6/16 - Viewed the home, immediately made an offer for $189,500, list price. Asked for 4% closing help. Pre-approved short sale with one lender, CitiMortgage.
6/18 - Offer accepted by seller, bank receives paperwork.
8/18 - BPO done
10/14 - Offer accepted by CitiMortgage.
10/18 - Home inspection done.
11/15 - After much questioning of the selling agent why paperwork needed by bank has not been submitted, find out seller has been arrested and detained in mental hospital for a month so far.
12/20 - Seller FINALLY gets a power of attorney so that someone else can sign the paperwork for her.
1/13 - CLOSED!
All told, the process took almost 7 months to the day. My advice, do not consider a short sale unless these 2 conditions apply to you:
1) You are absolutely certain that you've found the right home
2) You don't have any time restrictions
These both applied to my situation, and I can tell you that although the waiting is extremely frustrating, it is well worth it in the end if everything goes well. 7 months is a long time to wait, but I would do it all over again in a heartbeat BECAUSE I found the home that was perfect for me.
Added bonus, I have instant equity, as my home is worth $50,000 more than I paid Good luck to everyone, and thank you for sharing your stories with me while I waited for my own to go through. They kept me sane, and the success stories kept hope alive.
In almost every successful short sale transaction where there was a 2nd lien holder, & I was the listing broker & negotiator, I always tried to obtain short sale approval from the 2nd lien holder first, & then push harder for the 1st mortgage approval, with the 2nd lien holder approval letter in hand.
In your case, the 2nd lien holder is now, more than ever, in spoiler position. They know the 1st lien holder wants the deal, & so are in a position to demand more $ than the 1st may be offering. If the 1st doesn't agree, the 2nd can now make the 1st swallow a foreclosure later down the road, instead of cutting their losses thru the short sale, now.
And I've seen that happen. Rival banks have definitely been known to almost exact 'revenge' on each other, even with a strong fair market value purchase offer in hand. It really depends on exactly how high a % the 1st is offering the 2nd.
Depending on your state laws, & the seller's financial condition, the 2nd may decide they'd rather go after the defaulted seller seeking a deficiency judgment down the line rather than accept pennies on the dollar, now. Remember...the 2nd mortgage also has studied the sellers' financials closely.
If the 1st is offering 6%...the 2nd may agree. If the 1st is only offering 2%...the 2nd may tell them to go pound sand.
There's a lot more to a successful short sale than simply the strength of the new buyer's purchase offer.
BrokeHarry--Im going on month 6 on trying to get a short sale approved by the bank. Its been a painful process. Although I do think the bank is slow, there are many red flags that tell me part of the problem is the sellers agent. Because it has taken so long to get a approval from the first, I requested the seller agent go start working with the 2nd now. However, they told me they cannot go talk to the 2nd without the approval letter from the 1st? Are you saying that is not true, and they can very well start the process with the 2nd while we are waiting for the 1st to approve?
Im almost ready to give up on my short sale purchase not because the process is taking so long, but because I feel like the seller agent has been dropping the ball causing delays.
BrokeHarry--Im going on month 6 on trying to get a short sale approved by the bank. Its been a painful process. Although I do think the bank is slow, there are many red flags that tell me part of the problem is the sellers agent. Because it has taken so long to get a approval from the first, I requested the seller agent go start working with the 2nd now. However, they told me they cannot go talk to the 2nd without the approval letter from the 1st? Are you saying that is not true, and they can very well start the process with the 2nd while we are waiting for the 1st to approve?
Im almost ready to give up on my short sale purchase not because the process is taking so long, but because I feel like the seller agent has been dropping the ball causing delays.
Any feedback is much appreciated. Thanks
It's a complicated dance to get 2 or more lienholders on the same page & timeframe.
You need to know, up front, if the 2nd will play ball, or if they're going to be a spoiler.
A smart listing broker works both lenders simultaneously. I was almost always able to negotiate with the 2nd at the same time as negotiating with the 1st (who obviously holds the upper hand).
But once a 2nd lien approves, it's a lot easier to get them to adjust the approved closing date than it is to squeeze more time out of the 1st.
And once you have approval from the 1st lien, there is a window to close that can expire, & they may not agree to give an extension. It's imperative to move quickly. That means having the junior lien on board, early.
In almost every successful short sale transaction where there was a 2nd lien holder, & I was the listing broker & negotiator, I always tried to obtain short sale approval from the 2nd lien holder first, & then push harder for the 1st mortgage approval, with the 2nd lien holder approval letter in hand.
In your case, the 2nd lien holder is now, more than ever, in spoiler position. They know the 1st lien holder wants the deal, & so are in a position to demand more $ than the 1st may be offering. If the 1st doesn't agree, the 2nd can now make the 1st swallow a foreclosure later down the road, instead of cutting their losses thru the short sale, now.
And I've seen that happen. Rival banks have definitely been known to almost exact 'revenge' on each other, even with a strong fair market value purchase offer in hand. It really depends on exactly how high a % the 1st is offering the 2nd.
Depending on your state laws, & the seller's financial condition, the 2nd may decide they'd rather go after the defaulted seller seeking a deficiency judgment down the line rather than accept pennies on the dollar, now. Remember...the 2nd mortgage also has studied the sellers' financials closely.
If the 1st is offering 6%...the 2nd may agree. If the 1st is only offering 2%...the 2nd may tell them to go pound sand.
There's a lot more to a successful short sale than simply the strength of the new buyer's purchase offer.
Great information. Yeah we didnt know about the 2nd or i might have asked.
From my research, since we are in California, the 2nd lien holder would get nothing out of it going into foreclosure (If Im wrong let me know... Or if CA makes this better or worse for me as a buyer). It's true they would be the spoiler and very well could but we are hopeful this is the week it happens.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Short sale success - giving hope to others
