Short Sale listed for over 3 years (comparable sales, short, HOA)

[NYPhinfan13]

I'm looking at a short sale that was on the market for over 3 years. The listing agent finally lowered the price, but then proceeded to take it off the market. He's stating that the fact that is was on the market for over a 1000 days was putting people off. He will be re-listing it under a new MLS# and higher price. I was thinking of making an offer, but the fact that others were turned off due to the age of the listing getting me concerned. Why would others be turned off from the age of the listing? Maybe I'm missign something. Anyone have any comments?

[NYPhinfan13]

Also, I've been inside and have looked around. From what I saw, it was pretty much like other short sales that I've seen.

[Rushmore]

The question you're asking is pretty simple:

When one sees that any house has been on the market for such a long time, they assume there is a reason nobody is buying it, and their time is better spent elsewhere.

Throw in the fact that it is a short sale, and you have the added potential difficulty that there were possibly offers but the bank is very difficult to work with.

On the other hand, some buyers prefer to see a house with a higher DOM because it might imply the seller will be more motivated and flexible. This does not apply in the same way with short sales, because the bank's motivation is impossible to properly assess, because banks are essentially mentally ill entities, driven by factors often alien to actual human beings.

Just my two cents.

[Oobie119]

Be careful too as in some cases there is more than one bank to deal with, it may have been on the market for that long, dont assume there havent been offers, or interested parties. As we found, short sales can be a long, dragged out ordeal. We tried to purchase one and it went on for 6 months with 2 banks involved. As long as you have a good inspection, checking for mold, foundation issues and such- you should be ok.

[d4g4m]

What I've noticed with many short sales is that the asking price is tens of thousands of dollars more than the homes actual market value. It seems to be an attempt to try to squeeze as much money out of the sale to make up what is being lost on the amount owed.
There is an example of it on my street.

[yellowsky]

A check on the County Clerk website under the name of the owner will show how many mortgages that person holds. Any and all information you can find from the Property Appraiser will help you in your search. From the Property appraiser you can see just when the house was last sold and the price paid.
If a house has stood for so long as a short sale I too would wonder why. Good to question your realtor as well or better still, talk to the listing agent. Worth a try anyway.

[TamRE]

My buyers usually think when they see something that has been on the market for a long period of time that there is either something wrong with the home or the price is too high. There are many short sales that sit for a long period of time just because people don't want to deal with the hassles involved.

Your Realtor should be able to provide you with the details of the mortgage on the property. They cannot tell you the balance on the loan, but can tell from the county records who the mortgage company is, how many there are, and what the original loan amount was. You can also search county property records for documents related to the owner to see if there are liens and if any of the mortgages have been satisfied.

I provide all of that information to my buyers when they are looking at a short sale. It usually helps in making a decision as to whether they want to put an offer on it or not. Your Realtor should also be able to give you a comparative market analysis on the home to see what kind of offer you should be submitting. The bank will send someone out to do a Broker Price Opinion on the home and that will help in determining the value. What you see as market value in the MLS or property records is not the true market value of the home, it is the assessed value by the county and that is what the taxes are based on.

Your Realtor should also call the listing agent to find out any pertinent details about the short sale such as have their been previous offers. If so, were they turned down or did they back out before it got an approved price. You should not be going into a short sale blindly without knowing the basic details. Although short sales are the unknown sales because you never know what the bank will come back with, it does help to be informed.

Good luck if you decide to submit an offer.

[NYPhinfan13]

Yeh, the listing agent dropped the price $100K and in 2 weeks no one made an offer even though they had multiple showings. I don't know if any offers where made prior to the price dropping. I looked on the county tax site and saw the appraised value at 227K, the listing agent was asking 235k originally. My realtor is telling me that he will relist it at 250K.

[Ragnar]

Originally Posted by Rushmore

This does not apply in the same way with short sales, because the bank's motivation is impossible to properly assess, because banks are essentially mentally ill entities, driven by factors often alien to actual human beings.

LOL! Love your description of banks!

[Sunshine Rules]

A short sale should not be sitting on the market for 3 years without some other factors in play.

The list price may have been too high, the homeowners may have made the listing difficult to show, there could be multiple lien holders on the property. Is the home on well water? Septic tank? Is it possible that the living square footage of the home was increased without permits? All of these can be contributing factors to the time on market.

Your agent can easily check the listing history of the property in the MLS to see if it was under contract previously, as any status change will show up under the history tab for each and every listing in the MLS. By the way, it will also show if the home was listed previously, so doing a new listing now may fool a few buyers but not ones with astute agents.

If you are interested in making an offer on this home, have your agent check out the owner of record's name in the clerk of court records. You will at least know how many mortgages are involved and if there are other recorded liens such as mechanic, vendor or HOA liens. There can also be recorded judgments by credit card companies, FL Dept of Revenue, etc.

The name of the banks is also important information as some banks have more streamlined processes for handling short sales than others. Bank of America has just rolled out a new program to do responses in 20 days (we shall see how that plays out). Fannie & Freddie have also just announced they will be implementing changes June 15th to cut down their response time to 30 - 60 days. Some banks are notorious for taking months to respond back on a short sale contract.

Mortgages where the seller had to obtain private mortgage insurance (PMI) typically take longer to get a response as another layer of negotiations is now involved.

Before writing an offer I would also recommend finding out exactly who is handling the short sale negotiations on behalf of the seller. Is it the listing agent? Someone in their office? An attorney that specializes in short sales? Knowing the skill level of the negotiator is something you definitely want to find out. One note here: Just because a law firm is handling the short sale does not always equate to a faster short sale. Check into the reputation of the law firm too.

ON short sales your agent should be asking how far along is the seller in the short sale process, ie has the preliminary short sale package been submitted to the lien holders? Has a BPO (Broker Price Opinion) been ordered? One of the critical elements in doing a successful short sale is the homeowner's willingness to submit to the lender(s) ALL required information and documents in a timely manner. The seller has to show a valid hardship that prohibits them from keeping the property. Loss of equity alone is not a valid reason for a short sale. In the case of a 3 year old short sale, any initial paperwork submitted would be out of date, so ask if they have been routinely submitting updates to their file when required.

Correct pricing of the property is essential. Did the listing agent state why he/she dropped the price by $100,000 all at once? Did they do a market analysis? Pull a number out of the air?? Your agent should be able to pull up several comparable sales to determine where this particular property falls on the fair market scale and whether the "new" list price has merit.

Short sales are not predictable. But getting answers to the questions above will help determine if a particular transaction has a reasonable chance of closing. The time to gather this information is before writing an offer, not after.