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Hi Everyone,
My husband and I recently inherited some money and decided to invest a large percentage I'm buying our "forever home". We live in Upton, Massachusetts and already own and live in a duplex and rent out the other side. Our plan is to keep the duplex, rent the whole thing and live in the house that we'll buy.
We already found a house in Millbury, Massachusetts that we love. It's a short sale that needs a lot of work, so it won't qualify for conventional financing. Because of that, and the amount of work it needs- missing copper pipes, unsalvagable carpets, some paneling and ceilings to be replaced- it's been on the market for about a year, and the price has dropped from about $195k to $137k.
We are buying with cash, already showed proof of funds, and offered the full price. This place is amazing and it's worth it, at least to us.
It's been since Monday and we haven't heard anything. My realtor said the banks can be slow as mollasses. Is there any reason the bank would not accept our offer, besides the very unlucky and hopefully unlikely scenario of another cash buyer offering MORE than the listing price? I'm not familiar with short sales and want to be prepared, rather than happily planning the work we'll do then get an unpleasant surprise.
Thanks for any advice!
Last edited by diorlr2010; 05-06-2015 at 01:55 AM..
Reason: Added Location
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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With a short sale the seller and realtor set the price. The bank has to approve of it, meaning they are taking a loss. Depending on how much that loss is, they may prefer to hold onto it or foreclose and hope for more at auction or when they sell it. Unless they have already gotten approval for that price from the bank ahead of time, even an offer over asking is subject to their approval and can be rejected. Yes, they are notoriously slow, but that can mean a long wait to be rejected. That's the nature of the sort sale.
Yep, if its not an approved short sale, the price is simply made up. Fake price. Lets say they owe the bank $200k and list it for $137k with lender approval. Well of course the bank will say no. The bank might counter with $195k. This will go on for months to a year or more. Many times the bank will always want more than fair market value of the house because the homeowner owes more than its worth. Not a good deal for a buyer.
Since its uninhabitable, it sounds to me like it will eventually be foreclosed on and listed for sale with a realtor for its actual value. This might take another 5 years.
Oh, they are usually avoided by people who plan to own a home fairly quickly. They can take 6-12 months. On the other hand, I've known some that take just a couple of months.
Yes, you need to know where it is in all this...has it been approved for short sale, did the bank approve the list price. Do you have a knowledgable buyer realtor working on your behalf?
Short sales move very slowly. You're not dealing with just one person at a bank. There may be second and third mortgages on the place and all those lenders have to get involved. There will also be investors on the loan who have to sign off on the sale too. Anticipate a many months long process which may eventually go nowhere.
Hi Everyone,
Thanks for all your replies! Well, I heard from the bank today. There are other offers, so they had everyone give their highest and best offer. The "asking price" was $137k- I bid $155,500 ( just in case someone else bid $155k- lol can you tell I do a lot of EBay transactions?).
I hope I didn't bid too high or too low! It's hard because we have and idea what the other people bid. My guess would be they are investors, since most people interested in a cash sale rehab property probably wouldn't be looking for a live-in house.
This short sale has been approved for the bank, by the way- I should've been more clear about that. The house was appraised at $215k, and houses in good condition with the square footage, features and location of this house are selling (not just listed) for an average of about $260k. So basically, there is pretty much not easy that this house will end up being worth LESS than what we pay, if our offer is accepted.
What are some opinions on how much I bid? Don't worry about hurting my feelings ��. Oh, and of course I'll let you all know whether or not we get the house!
Thanks so much for all your advice, this is a great forum!
I have never understood the concept of "offered at $xxx"; fine, I will pay that price in cash, and then the bank balks or starts playing games.
In my world, you offer something for sale at a price, and I agree to pay that price , you sold it!
But that appears to happen in the "short sale" world. Frequently.
So, OP, be prepared for the bizarre and unimaginable when you are dealing with a bank owned property.
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