What is a Short Sale? (contingencies, appraisal, foreclose, agent)
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We put an offer on for 100 K home.. but it's a short sale and weve been waiting almost 2 months for the lender to sign off on it or something. I assume they got so far in payments. the owners that is...
The Owners accepted our offer and we keep resigning paper work to extend the contracts but it feels like nothing is being done on the lenders behalf... It's a great house but I dont know how long it takes. anyone know?
I've seen them go as long as 4 months. If you want to buy a short sale, be patient...they take a long time.
As a side note, as a buyer in this market, there are many deals just as good that have already gone back to the bank. They are often known as REO (Real Estate Owned), which is weird, since they are actually Bank Owned. They usually are much faster on response, similar to dealing with a regular owner. If you don't have time to wait on a Short Sale, but want a good deal, look at REOs
Edit * Sorry, I didn't answer your original question. A "Short Sale" means that the seller is trying to negotiate with their bank to let them sell the property for less than the amount they owe and have the bank "forgive" or "waive" the remainder. They may or may not be behind on payments, but the house is worth less than they paid for it, and they can't afford to bring enough to the closing to make the difference up.
Short sale = the people are upside-down in their loan and owe more than it is worth. Further, they cannot afford to keep making payments. So the bank agrees to sell the house "short" of what is owed and forgive the difference.
For instance, I am buying a short sale house. It is taxed assessed at $93k. The people re-fi'd it to $150k. MY purchase price is $83k.
The problem is that often times the people discuss with their bank that they want a short sale. The bank may say "bring me an offer and we'll consider it". So the owner and their realtor figure some price out for the house. Commonly, they accept multiple bids, select one as the winner, and send it to the bank for approval (although I have heard about multiple bids being submitted to the bank for the bank to decide who "wins"). So at the point the seller has signed, the house becomes contingent.
The bank may take up to 4 months to get back to you as to whether or not your offer is accepted. It does NOT matter whether your offer was for full list price or more. That does NOT speed up the process. They will then order a BPO (an appraisal) and may come back saying that your offer is accepted, declined, or that they want even MORE money than the homeowner listed it for. Short sales are often sold as-is and offers with contingencies are not likely to be accepted. I have found, IMO, that short sales are priced so well that full price offers are required, if not offering just a tad OVER list.
Good Luck! I am currently awaiting a response from the seller's bank as to whether they will accept my full-list offer. It's torture. So I obsess on this forum A L L D A Y L O N G.
PS: If there are multiple mortgages on the house, that also is a cause for the delay for each lender must agree to take less than is owed. Maybe Bank 1 and Bank 2 agree, but Bank 3 wants a bigger cut.
However, they may be agreeable to only taking $5,000 instead of the $00,000 that is owed because if they don't and the people foreclose on the property, they will get ZERO.
Short sale = the people are upside-down in their loan and owe more than it is worth. Further, they cannot afford to keep making payments. So the bank agrees to sell the house "short" of what is owed and forgive the difference.
For instance, I am buying a short sale house. It is taxed assessed at $93k. The people re-fi'd it to $150k. MY purchase price is $83k.
The problem is that often times the people discuss with their bank that they want a short sale. The bank may say "bring me an offer and we'll consider it". So the owner and their realtor figure some price out for the house. Commonly, they accept multiple bids, select one as the winner, and send it to the bank for approval (although I have heard about multiple bids being submitted to the bank for the bank to decide who "wins"). So at the point the seller has signed, the house becomes contingent.
The bank may take up to 4 months to get back to you as to whether or not your offer is accepted. It does NOT matter whether your offer was for full list price or more. That does NOT speed up the process. They will then order a BPO (an appraisal) and may come back saying that your offer is accepted, declined, or that they want even MORE money than the homeowner listed it for. Short sales are often sold as-is and offers with contingencies are not likely to be accepted. I have found, IMO, that short sales are priced so well that full price offers are required, if not offering just a tad OVER list.
Good Luck! I am currently awaiting a response from the seller's bank as to whether they will accept my full-list offer. It's torture. So I obsess on this forum A L L D A Y L O N G.
Please keep us posted!
Jenn :O)
Nice post! Head over to behr.com and start obsessing over paint! They have a feature where you can upload pics and see what the house will look like after painting.
I'll keep you posted... almost 2 months now and still waiting. the house is appraised at 103 K, But the owners accepted our 100K offer. idk why banks just wont accept us i dont get it.
It is what we are all wondering! With our situation, it should really go through. We have our buying agent, selling agent, sellers, short sale mitigator, and us of course all working on getting this deal to go through. If it falls through; NO ONE will get paid. There goes all the work from each person from our buying agent checking status every day, the mitigator dealing with all the bs and the listing agent finding all the comps to justify the price listed, and the time we are spending waiting for this to go through, not that it is costing us anything as rates aren't moving and all other real estate is still dropping in our area, but come on already!
Like Jsimon says, this forum keeps you busy and can read about other situations to get a better feel of what can be entailed in a short sale. They take time. Our timeline:
Feb 11th offer submitted
Feb 13th learned sellers signed accepted
Feb 27th Short Sale packet and PA sent to bank from mitigator
BPO Ordered and done sometime inbetween here and April 14th
April 14th Bank requested us to sign new PA with updated closing date of 5-29
Today- Still waiting to hear from Negotiator for final verdict
Have our financing taken care of, insurance quote for homeowners insurance ready, inspection person lined up and down payment in bank.
Be sure to have all your ducks in a row, just in case they do come back and say "lets close it, and close it really fast"!
My bank wants to order the inspection now, even before the seller's bank has approved the short-sale price.
Grant it, my bank is paying for it, but is that a wise thing to do? I mean I love getting my stuff lined up and as much done as possible but...
Thanks! Jenn
Are you doing FHA? The FHA appraisal/inspection is $425, if the deal doesn't go through, you will have to pay that out of pocket. That's why we are waiting for acceptance for both FHA and personal inspection. I can get my inspector in around a 48 hour turnaround.
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