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As all of you know, the short sale process is horrible. I have been waiting a long time now, and have been going through a ton of extensions.
I figured that I might be really bummed out if I go through all of this wait, finally get it approved and doing the inspection, I find a major problem.
Do you guys recommend going ahead and doing the inspection now? The seller does not want to pay the cost for anything, so I have to pay for utilities to do the inspection. Is it a good idea to get it out of the way?
As all of you know, the short sale process is horrible. I have been waiting a long time now, and have been going through a ton of extensions.
I figured that I might be really bummed out if I go through all of this wait, finally get it approved and doing the inspection, I find a major problem.
Do you guys recommend going ahead and doing the inspection now? The seller does not want to pay the cost for anything, so I have to pay for utilities to do the inspection. Is it a good idea to get it out of the way?
At this point, I'd wait until you have a short sale approval in hand, before you spend your cash on further inspections (assuming you already looked at the property very hard before writing your offer).
The property has been vacated, & the utilities are shut off.
In my experience as a listing broker, a large percentage of short sale attempts get thumbs down from the lender when the property has been abandoned.
Successful short sales are mostly the domain of owner-occupied, primary residences for sellers with well documented, legitimate hardships, beyond simply being underwater.
Once the seller completely bails on the property, & shuts down the utilities...that property often becomes a foreclosure waiting to happen, regardless of the strength of your offer.
The seller of an abandoned property will have to have a very strong hardship letter, & a very sharp listing agent, if they hope to convince the lender to approve that short sale.
The fact that there has already been a number of extensions on the abandoned property suggests to me that the lender is simply biding their time (in a gradually appreciating market) until they drop the guillotine.
At this point, I'd wait until you have a short sale approval in hand, before you spend your cash on further inspections (assuming you already looked at the property very hard before writing your offer).
This was a pre-approved short sale. I initially submitted my offer back in January they day after it came on the market. They said that they were considering my offer and another person, but the other person was ahead of me. Then, they put me in as the backup offer. Then they fully accepted the other person. 1 month later, they come back to me, and ask if I want to resubmit, because the other person's loan fell through. Mine is cash. They said that they had to submit a cancellation, then a resubmission of my offer. The other person's offer took 3 weeks to get approved. Yes, they are biting their time slowly. I am now past the 2 month mark since my resubmission.
Now, they are doing another appraisal, because the last appraisal on the property was in November, and its over 6 months old.
This was a pre-approved short sale. I initially submitted my offer back in January they day after it came on the market. They said that they were considering my offer and another person, but the other person was ahead of me. Then, they put me in as the backup offer. Then they fully accepted the other person. 1 month later, they come back to me, and ask if I want to resubmit, because the other person's loan fell through. Mine is cash. They said that they had to submit a cancellation, then a resubmission of my offer. The other person's offer took 3 weeks to get approved. Yes, they are biting their time slowly. I am now past the 2 month mark since my resubmission.
Now, they are doing another appraisal, because the last appraisal on the property was in November, and its over 6 months old.
I understand, professorman. But guess what? The new appraisal most likely will come in higher.
And the previously approved price probably went out the window, because the banks now know (or believe) we're in an appreciating market.
You're involved in a race between further deterioration of the abandoned property, versus accelerating overall appreciation in the marketplace...& the bank may be of the opinion that the property will be worth more 6 months from now than it is today.
If you really want to push this to a conclusion, one way or another...then I would suggest you submit an addendum raising your cash offer by maybe a couple thousand $ in one final effort to kick the bank off the fence.
Then, when you get your approval...go do your very thorough inspection right away, just to be sure you really want to move forward.
BrokerHarry, could you say how often you see tenant-occupied short sales? Do those often get denied too, or does it help that the property isn't vacant at least?
Quote:
Originally Posted by BrokerHarry
The fact that there has already been a number of extensions on the abandoned property suggests to me that the lender is simply biding their time (in a gradually appreciating market) until they drop the guillotine.
That sucks. If they plan on not approving, why not just deny it straight out? That seems like doing demonstrable economic harm to the buyer, who is waiting on them and not offering on other properties.
BrokerHarry, could you say how often you see tenant-occupied short sales? Do those often get denied too, or does it help that the property isn't vacant at least?
Sometimes rental properties get approved. But if they're tenant occupied, the bank will ask "what's the hardship?"
Simply being underwater on the mortgage balance does not constitute hardship in the eyes of most lenders.
An investment property that suffered loss of equity is not necessarily viewed as a hardship if the owner is still grossing the same as he was when he entered into the original note.
Most banks consider borrower losses on investment properties & vacation homes in a similar way that Wall Street looks at investor losses on stocks that went south: i.e Tough Luck!
Historically, most approved short sales have been the domain of owner occupied primary residences for borrowers that could substantiate severe financial hardship due to job loss or transfer, illness, death, & sometimes divorce (but not always).
Quote:
Originally Posted by Karey43
That sucks. If they plan on not approving, why not just deny it straight out? That seems like doing demonstrable economic harm to the buyer, who is waiting on them and not offering on other properties.
Buying a short sale is a crap shoot. The bank is under no legal obligation whatsoever to approve a short sale. They have the legal authority to pursue foreclosure as a remedy when the borrower defaults.
There are different statutes regarding foreclosure timelines in every state. But in general, the bank is under no obligation to hurry up the process.
The short sale procedure is all about the borrower who is in default, first & foremost. If they can substantiate in the eyes of the lender that they are deserving of extra consideration, the bank can agree to a short sale, if they want to.
Only then does the new buyer come into consideration.
There have been MANY short sale attempts where the buyer was offering above current fair market value, but the transaction still goes down in flames because the seller did not qualify or meet the hardship guidelines.
Those properties eventually go to foreclosure. And in many areas, appraisers now confirm that the REO sales often net the lenders a higher return than the short sales did.
We were in a short sale transaction for 7 LONG months. We waited VERY patiently. We finally gained approval a week ago at the price we offered. HOWEVER, The bank "MI" required the seller to sign a $80K promissory note for the short sale transaction to complete. The sellers refused and the short sale was cancelled. They are now going to foreclose instead to be debt free. The house will rot and the bank gets nothing. Makes sense to me! I would not spend a penny until you have a signed approval. Luckily we didn't spend any money. I do think it took off a few years my life! Short sales suck! Good luck and don't hold your breath like we did...
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