Short Sales... Grrrr!!!

[Avalon08]

I found out more info on the two short-sales that are my competition. They are two condos on one side of a four-unit building. They have different owners' names, but both went up for short-sale on the same date, and went under contract on the same date. The last asking price was $299K apiece. The county records show one of the units selling 9/07 for $560K. The other unit is not in the county records. (The two units on the other side of the building sold in 05 for over $400K each.) The listing info says the assessment for each short-sale unit is $373K. They went under contract 10/6/08 and the close date is listed as 2/27/09. Does this mean the bank has approved the short-sale? If they're assessed at 373, why would the bank take 299 or less...? Any insight you can provide would be helpful. Thanks!

[GreggT]

It is my understanding most banks will not consider short sales, foreclosures, or any kind of a distressed sale in their comps which will tend to puff their assessments. If the majority of the sales in that particular area are distressed, a bank might pull back in time to gain numbers.
When we bought our condo a couple of months ago, none of the bank assessments reflected what was going on and they were completely out of touch.

[Jedi5]

We went out again to see the short sale property we have the offer on yesterday. Both our agent and the seller are under the impression we'll be closing mid to late February.

The seller was really nice. First time I met him. We talked and he offered to open his house to us should we want to come over whenever we want to get decorating ideas.

I guess the wait on this is the 2nd mortgage. He had two on this house and while the first one cleared, we are now waiting on the 2nd bank to approve this sale.

[Avalon08]

It is my understanding most banks will not consider short sales, foreclosures, or any kind of a distressed sale in their comps which will tend to puff their assessments. If the majority of the sales in that particular area are distressed, a bank might pull back in time to gain numbers.

Gregg, I'm sorry to be dense, but I don't understand what you mean. Are you talking about banks that are approving the short-sale? They want a higher price, so they rule out other distressed sales in their comps, thereby justifying their disapproval of a low offer? Is that what you mean?

If that is what you mean, then in the situation I mention above, the bank would not be approving an offer of 299 or less on an appraised value of 373. Yet....a closing is scheduled, so it appears the bank has approved some offer. But then conversely, a bank that is asked to approve a mortgage would be considering distressed sales in their appraised values, wouldn't they?

So darn complicated. I am still furious that people could over-extend themselves by paying 400K+, yet get to walk away by selling their place for 299. What is the price they pay -- ruined credit? Meanwhile, I lose my entire 20% down payment because of the drop in value over two years and now can't afford to buy anything else because I don't have any down money.