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I'm waiting for my mortgage details, pre-qualification letter, etc. to be in place (which should be this week) before making appointments to see the inside of homes I'm interested in, so I'll be ready to make an offer.
A couple of the houses I'd been keeping my eye on just changed to short sales - I assume the owners tried to sell but eventually got too behind on the payments? Is there a reason an owner would *want* their home to turn into a short sale? I ask because one of the homes that just turned into a short sale was/is still priced about 50k more than comps.
I'm told short sales take a long time and since I want to close by November 30, I may not want to get my hopes up on any of the short sale homes. I was watching a show where a couple bought a short sale home and the process was that first the seller had to decide whether they'd accept the offer (why? isn't it in the bank's hands by the time it goes to short sale), which took only a day or two, and then the bank had to accept the offer, which took more than a month.
Why do banks take so long to respond? It is just because they're generally swamped? It seems in an area where homes aren't selling, even the banks would want to respond quickly to an offer so they can get most of their money back. Since I don't have a lot of time to wait for a response, can I make an offer on a short sale much like you might with a regular sale, where your offer is good for 72 hours, or a week, or some reasonable amount of time? I suppose its very likely the bank wouldn't get back to me in time, but if they did that would be great, and if they didn't, I'm not held up from making an offer on another house that could close more quickly. Advice?
It is pretty much impossible for you to close a short sale within 60 days, nevertheless by 11-30. Ours took just about 5 months which seems to be the average +/- a few weeks on this board for people that have closed them. Do a search on Short Sales on this forum and you will find a heap of information of why they take so long.
Sellers decide to short sell when they owe more than the property is worth, right now. The overwhelming number of propereties listed as short sales do not close as such. The reasons are endless and include:
The seller is the owner of record and therefore has to agree to the short sale before it can be presented to the lender.
The seller may or may not qualify for hardship consideration. Something like a 401K is enough to disqualify a seller.
The lender may renegotiate the loan instead of agreeing to a short sale.
If the mortgage involves PMI or FHA insurance, it may be in the lender's advantage to let it foreclose. If not, the insurers also have to agree to the short sale.
The bank may be the servicing agent ....the messenger.
More than one lender is involved, common when there are home equity loans.
I think it unreasonable to consider a short sale and expect to close by 11/30. You would be lucky to hear back on an offer made today, by then.
I got an email from the selling agent. What does "short amount" mean?
"It is a short sale, but it's one lender, I have a short sale expert already in contact with the bank, and the "short" amount is pretty small."
Does she mean the short sale price is less than the asking price? This is the house whose asking price is currently about 40-50k higher than comparables.
The "short" amount is the difference between the market value and the amount owed by the seller on his loan(s). The seller can't sell the home for at least what is owed to the lender and is short the difference. That's why it's called a short sale. The listing agent is saying the difference between asking and loan value is small, which indicates the lender will be more likely to accept the sale if they get asking price.
However, you should have your agent check what the comps are, and offer what you think is a fair price. I wouldn't want to offer more than what comps are going for, especially if I need to get financing for the purchase.
Thank you for taking the time to respond. So if the house is currently overpriced, and the "short" amount is small, meaning the asking price is close to what is owed on the loan, doesn't that suggest the bank will want to get close to what is owed, therefore still too much compared to the comps? In looking up this particular house, I see the sellers paid about 70k less than current asking for it a few years ago, or about 20k less than its worth now. With the asking price being high, I guess they refinanced to get money out at some point and now owe more than they paid for it.
If the bank agrees that the seller is a candidate for a short sale (i.e., meets hardship requirements, no assets, etc.), then they will do their own market value assessment (called a BPO) and decide if the offer you make is fair. Then they need to decide if they are willing to take that loss on the loan.
It is pretty much impossible for you to close a short sale within 60 days, nevertheless by 11-30. Ours took just about 5 months which seems to be the average +/- a few weeks on this board for people that have closed them. Do a search on Short Sales on this forum and you will find a heap of information of why they take so long.
our short sale was approved by the bank 45 business days from the offer being accepted by the seller. actual closing 30 calendar days later. from everything I have read,thats pretty quick. the first lien holder approved in about a month and the 2nd approved about another month later.
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