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Ok, sorry to keep harping on the short sale subject but... the house we are interested in is VERY interesting to us.
By law, if I have the lenders information (whoever owns the mortgage) can I as a potential short sale buyer contact that bank directly and ask them for a deal?
I know the current owner who just began foreclosure just wants to do a short sale and avoid foreclosure at all cost.
Is this in our favor?
My realtor told me we'd have to wait for the bank to list it's "sale price" before we could make an offer. Is that correct? This seems like it's a waste of time to me if two parties can get together and make a deal directly with the lender.
Also, if the owners paid $370 four years ago, is it fair for us to think maybe there is a chance we can get the house for a much lower number like say, $230 - $250? To me it would benefit the lender to just avoid foreclosure and go with a short sale even if they are taking a loss. Is this correct?
Generally the laws of your state will govern foreclosures. Technically contact between the lender and any potential buyers is probably not going to be allowed. In Illinois (my home state) the law firms that represent lenders in foreclosure cases do not make themselves available to investors or buyers until the process is completed.
The amount that the lender will attempt to market the house at is generally set with a "broker's price opinion" and is set by real estate brokers hired by the lender. The same data that they use is available to all real estate agents via MLS, it would be smart to talk to a buyer's agent to determine if the price you have in mind is supported by recent closed sales.
Ok, sorry to keep harping on the short sale subject but... the house we are interested in is VERY interesting to us.
By law, if I have the lenders information (whoever owns the mortgage) can I as a potential short sale buyer contact that bank directly and ask them for a deal?
No. The home still belongs to the owner (hence the term "owner") and it's the owner's call whether to sell to you or not. If the owner decides to short sale, then the bank will decide if they will agree to the sale at the price offered.
I know the current owner who just began foreclosure just wants to do a short sale and avoid foreclosure at all cost.
Is this in our favor?
Yes, in that you have a chance to work out a deal with the seller if he agrees sell to you. As before, his lender will also have to agree to the short sale.
My realtor told me we'd have to wait for the bank to list it's "sale price" before we could make an offer. Is that correct? This seems like it's a waste of time to me if two parties can get together and make a deal directly with the lender.
No, you can make an offer now. If the seller agrees, the offer can be submitted to his lender with supporting documentation (hardship letter, financial info, etc). Usually, the lender will not determine a price to accept until they get an offer submitted by the seller. Then they will look at market value to see if it is a reasonable offer. That's assuming they will agree to a short sale in the first place.
Also, if the owners paid $370 four years ago, is it fair for us to think maybe there is a chance we can get the house for a much lower number like say, $230 - $250? To me it would benefit the lender to just avoid foreclosure and go with a short sale even if they are taking a loss. Is this correct?
You should look at comparable sales to determine what a fair offer would be. That's what the lender will do.
Thanks in advance....
See my responses in Red above.
Edit: Regarding waiting for the lender to set a price, that will happen after it is foreclosed and the lender takes it back. Eventually, they will put it back on the market as bank owned at a price they set. At that point, anyone can make an offer like any other listing.
Edit: Regarding waiting for the lender to set a price, that will happen after it is foreclosed and the lender takes it back. Eventually, they will put it back on the market as bank owned at a price they set. At that point, anyone can make an offer like any other listing.
Thank you so much, this makes so much sense to me now (the process). Asking the right questions helps LOL
We are going to see the house tonight and talk to the owner, we won't make an offer but will at least get more information. Luckily she is very nice and appears to be ready to just "get out from under this" so I'm hoping if all works well, that this would be a happy ending and a win-win for all involved. It's hard not to get excited but I think to some degree, having a positive attitude does help.
Thanks again for explaining this to me.
RJCM gave you some good info. I'm concerned that your agent said you had to wait on the bank to set a price to make an offer. It sounds like he may not be very knowledgeable about short sales at least. Ask him point blank about them, and if he doesn't know much you better tell him to educate himself real quick if he wants your business.
Not necessarily true. FHA and VA loans usually get an approved price, prior to a contract.
With FHA it's their PreForeclosureSale (PFS) program.
I got an approval letter for a sales price at $20,800. This deal has a purchase price of $199,900. You think we would be good. The servicer, denied our final HUD, because it doesn't meet the 88% of fair market value target.
Evidently, their spreadsheet can't calculate correctly, and no one is willing to change a typo. The appraisal came in at $208,000.
I am suppose to get a call this week from the closing dept manager. I have already emailed the VP of loss mit and the president of the company.
Not necessarily true. FHA and VA loans usually get an approved price, prior to a contract....
That's why I said "usually" . There are some lenders starting programs to provide pre-approved pricing to speed up the process. Most do not yet. If the OP's agent knows that the lender for this particular owner will pre-approve pricing, then perhaps that's why the agent said to wait. However, does not sound like the owner has even started short sale discussions with the lender.
RJCM gave you some good info. I'm concerned that your agent said you had to wait on the bank to set a price to make an offer. It sounds like he may not be very knowledgeable about short sales at least. Ask him point blank about them, and if he doesn't know much you better tell him to educate himself real quick if he wants your business.
We have been househunting for awhile, ended up signing an agreement with our realtor in the event we find a house, he's our buyers agent. That contract him for him to help us find homes ended in October so we are no longer obligated to use him as our realtor, I used to have my real estate license and worked for th same broker he does so there was some history there but other than that, I no longer am practicing and I don't feel any particular "loyalty" to him as he's no longer "our" agent. As a friend though, he has already said we could ask him an occasional question and he'd be happy to help.
(FYI: I was a brand new agent as the market was going down and with little resources and havint to also work full time, I never did get my foot in the door and get to learn more and get any business, so that's why I'm not very knowledgable about some of these terms i.e., "short sales".)
Update: We did go to look at the house last night, we decided that we do want to rent it (as the owner has it for rent right now) and so we are making an appt soon for a face--to-face to sit down and talk further.
We really like the house and have no lease where we are, we figured that the worse case scenario, we'd rent her house as long as we could and then buy either it or another home.
I know that may sound a little risky and crazy to some but we have the finances to do this and already have a mortgage approval letter so buying is simply a matter of finding one that we BOTH like enough to buy. If it works out that it's this house then that's great but we are aware that we may be out on our rumps in about six months give or take. We are okay with that.
If it goes to foreclosure the lender (or successor owner) will have to give you 90 days notice to move if you are month to month: http://www.nlihc.org/doc/701-704-Public-Law-111-22.pdf (broken link)
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. There are some lenders starting programs to provide pre-approved pricing to speed up the process. Most do not yet. If the OP's agent knows that the lender for this particular owner will pre-approve pricing, then perhaps that's why the agent said to wait. However, does not sound like the owner has even started short sale discussions with the lender.
