Length of time for short sales-Your experience? Opinion? (North Port: comparable sales, real estate)

[MrTudo]

We made our initial offer at the end of january. That offer was rejected, despite the fact it was only 10% back of asking price about a month ago. We raised our offer so that it's actually pretty dang close to asking price. We have not heard anything since. 3 Months now, and have entered the 4th month.

This has got to be the most ridiculous real estate transaction, ever. Anyone else?

[dmccauley]

From what I have learned from friends is this could be a really long process. The questions I would ask is who came up with the asking price of the home. Is it even close to what the pay off on the mortgage is? If its not your probably in for a long hall. The banks are requesting appraisers to go out and give them the fair market value of the home. Do you think the price is close to that. Do a little research online. If you know the address you can go to the county site and search the records. It will tell you the mortgaged amount on the home. This way you can get an idea. Good Luck

[MrTudo]

Oh of course it's not close to the payoff. Almost looks like a scam and there's so many of them everywhere. I don't see however why that would change anything.

But the first question, who priced the house to begin with is a good one. I assume the asking price was one that the bank advised. Not necessarily??

[dmccauley]

My friend came up with her own price and is short selling also. She accepted and offer for I think $230K the bank came back (after months and months and appraisal) of $380K. Thats a huge difference. I only made a comment about the payoff because the banks are trying to recoup as much as they possibly can or at least get fair market value for it.

[FauxPas]

My realtor, who has handled 42 successful short sales out of 42 tries, explained the process to me this way.

The bank is not involved in the original asking price for a short sale.

The realtor develops a fair market value asking price based on comparable sales and gets an offer(s). The homeowner takes this offer and his proof (copies of bills, pay check stubs, etc) that he cannot afford to make the payments any longer to the bank and asks them to consider it.

The bank can sit on it for 3 or more months, but if the realtor used your bid as the best offer, and priced the house correctly, then you "should" get the property. The bank can also take a lower offer if it is cash, or closes sooner, etc.

The process was developed to help the banks avoid foreclosure, which is even more expensive for them. They wind up eating the unpaid mortgage, realtors fee, liens, etc, so they are taking a beating. My realtor told me about a client of hers who had a $17,000 IRS lien against his home due to non payment of personal income taxes. The bank had to pay that off too!

Hopefully, someone will correct any errors of mine here.

I have to wait until probably July to find out about my own offer.

[FLBob]

Has the bank filed a lis pendens? If so when? If not, is it possible that the current owner is paying their mortgage? Believe it or not banks are placing a higher priority on non-performing loans. The loss mitigation departments are understaffed.
My first thought was that the seller's paperwork may not have been complete, but you said that you've had your offer rejected, so loss mitigation has reviewed the package. Normally turn-a-round time diminishes after the first offer is rejected.
You say that you are near asking but how does the asking compare to comps. The bank will be using a Broker Price Opinion (BPO) to compare your offer against. If you're low compared to the bank's BPO they may decide to wait.
Do you know if the seller is using an experianced loss mitigation negotiator? There are RE attorneys and title companies and RE agents that have a reputation of working the SS to get it closed. The seller's needs to be a squeaky wheel, or envolve someone to squeak for them.

[SoFLGal]

Has the Realtor turned in the complete short sale package? If one piece is left out it will go back to the bottom of stack and they'll deal with another case that has a complete package. If your offer was rejected then I'm guessing the package was complete.

How experienced is the other Realtor in dealing with short sales? How many have they closed? We are certified to deal with short sales and have closed many.

Is there a second mortgage? Properties with 2nd mortgages almost never work out because the first usually offers the second $1K or less and the second almost always refuses and just wants to foreclose.

Have your Realtor do a BPO/CMA on the property. Is this figure pretty close to your offer? If not, it will most likely be rejected. This is how the bank determines the price of the property: 20% on either side of living square footage, 5 years on either side of age, if it's an urban area you can go out a mile for the subject property, suburban is 5 miles and rural (North Port for example) 10 miles. The closer the comps the better. You can go back 6 months in sales but banks prefer them to be 3 months or less since the market is changing so rapidly. Then the Realtor should use the most similar comps that come up. If nothing comes up then you adjust year built, miles, etc slightly until you come up with something. Have your Realtor run the comps like the above and see what she/he comes up with. This will give you a pretty good idea of what figure the bank will come back with. Now, in short sales I have seen some banks that are just completely out of line with their figures.

And lastly, 95% of all short sales fail and end up in foreclosure due to lack of knowledge of the Realtors, unwillingness of the banks to cooperate, etc. You may get a better/quicker deal once the home has gone into foreclosure.

Good luck with it!

[imagardener]

Short sales and banks remind me of how people owning stocks that have crashed in price hold on hoping that the situation will improve when there is no hope in h**l that will happen.

IMO part of the reason banks don't want to do the deal is that they will then have to declare their loss. And once that starts happening (massive losses actually showing on their books) they are in trouble with the bank commissioner because they don't have assets. I am in no ways an expert but I know that banks are required to have a certain % of assets (money or other) to operate.

If they are below that % of real assets they have to either get more money in the bank or fail. The banks are between a rock and a hard place (no I'm not crying for them). They have massive losses that they cannot afford to put on the books or they will fail the asset test.

That is why IMO banks don't want short sales unless the numbers benefit them (or at least don't put them in peril). Being in limbo is their only hope until someone comes up with a loosening of bank regulations to get them out of the fix they put themselves into with cheap money lent to people who couldn't afford to pay it back.

Good luck with your purchase. Hope it works out.

[MrTudo]

I have had customers in similar situations over the years. They are the ones that came into the market in 1980 and bought silver for $30++++/oz. They would call requesting information and upon the initial qualifying call they would of course mention their "experience" ( when in fact they had none ).

They would ALWAYS talk about how painful it was to be holding on to this assett that has lost a great amount of value. I usually terminated the conversation shortly afterwards by explaining that selling that asset would only hurt once, and then they could move on to other, more positive things.

[davery5872]

I was invloved in a condo short sale for about months. We were originally the back up offer. Three weeks after our offer was placed, we were notified we were the offer "on the table", the other offer was rejected. We waited. We were told it would take 45 days. In the meantime I found the condo listed as a vacation rental and inqiured about it, under another name. They were still taking reservations 4-6 months in advance. No mention of trying to sell it. Finally after over three months we found another condo, made an offer and it was accepted. No more short sales.