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.
I am looking for a property in Kenvil (Roxbury) NJ which is on short sale. Is it a good idea to buy a short sale property since the bank always want their money back even though the market value of the property is down. I have seen that average listing price of kenvil is much less then the listed property i am looking at. Any opinion on it. Do bank negotiate with their price or they want their money back anyways.
from what i have heard, there are mostly multiple offers and it takes a very long time for the bank to make a decision. though, would love to hear from people who have bought short sales.
And also keep in mind that many people either:
bought in a very hot market, or...
took out a second morgage
And now the home is not worth what they owe. In these cases, a short sale is not a great bargain.
I would comparison shop, and not only focus on short sales.
I do know a couple of people who have pursued short sales, and they either were outbid, or walked away because several months went by with no response from the bank.
A short sale is a situation where a property seller needs to sell their home “short” of what they owe on their mortgage. It is an alternative to foreclosure where the mortgage company must agree to a reduce the payoff for the sale to proceed. The seller cannot make money on a short sale situation.
Proceed with caution if you're a prospective buyer on a short sale property. If homeowners are letting their mortgage payments slide, does it make you wonder if they're deferring maintenance such as taking care of plumbing leaks, the watering of the landscaping, changing air filters, etc... ?
A buyer can pay for inspections but it’s really for information only - not to get repairs made or repair credits at closing. Inspections and appraisal should be done once the seller accepts the offer which could be weeks before the bank accepts the offer. If the bank rejects the offer, the buyer is out the cost for inspections and the appraisal. If the bank accepts the offer, they may demand a closing sooner than the buyer's able to complete all inspections. There's no standard of practice so it's best for the buyer to be proactive as if the offer is accepted.
The mortgage company is a third entity that is not a party but a contingency to your contract. Their decision will affect the outcome of the transaction. The seller's mortgage company will review the short sale proposal and closing the sale will depend on their response. The asking price is not always an accurate reflection of what the mortgage company will accept. Some short sales are advertised with low market asking prices as a strategy to entice bidding wars to drive up the price in hopes of having a chance of getting an acceptable offer to present the mortgage company. Remember, the seller doesn't care what the house sells for because they aren't going to get a penny of it.
Mortgage companies are not in the business of selling homes. Many short sales are failing because the mortgage company representative is unfamiliar with the local market and responds with an unrealistic proposal. The mortgage company is probably not located in the same city, or even state, of the short sale and are probably working on other short sales that are located in different markets nationwide as well.
Furthermore, Many loans have PMI (Private Mortgage Insurance) that will cover a portion of the loss. So, the mortgage company's motivation may be less since they're covered regardless. You may have to start negotiating with the PMI company which will only add more time to the sale process and still won't guarantee the sale. An escape provision should be added into your offer on a short sale property in case the process takes longer than you're willing to hold out or if another property more suitable for your needs becomes available.
A bank has an indefinite time limit to approve the sale. Once the bank gives their approval, they generally want to close ASAP. So, before the sale is even approved by the bank, the buyer will have to have had their inspections done, their appraisal done and their loan qualification taken to loan approval on the chance that the seller's mortgage company approves the offer. Typically, the closing is less than a normal 30 day time frame. Sometimes as little as 2 weeks. So, you, your lender, your title company and your realtor better be prepared. Once the offer is accepted by the seller, the purchase process should begin on the chance that the bank will approve the purchase.
When buying a short sale property, don't expect a quick and logical answer nor regular communication. The mortgage company will seek any assets the homeowner may have. They may demand the brokers reduce their commissions as well. They may require the seller to sign a personal note to pay back the shortfall. Remember, the mortgage company wants to recover as much of the loan as possible. If the property goes to foreclosure it will simply get passed on for another department to deal with.
In some markets, short sales may not be the best deal. When the market is declining and the lender is trying to get the most they can out of the sale, you may not succeed in getting a lower price than the current market value. You're realtor can show you other similar homes for you to decide if the risks of buying a short sale is worth it to you.
In 2008, we've seen more short sales come on the market and we're expecting to see even more. I hope to see lenders making adjustments to the short sale process to avoid foreclosures and make a better situation for everyone. However, with so many people in different departments and the fact that they're helping people walk away from an obligation they took themselves, that may take a long time to work out. I guess we'll see.
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.
