Short Sale Question

[Ndaccountant]

I am being moved by my company and will be living in an area that saw some steep price drops during 2008-2011. Now, this simply corrected an absurd run up from 2003-2007, especially new construction. The prices today are much more stable in the area and the population continues to increase. With that all said, roughly 25% of the homes on the market are short sales.

My questions are this:

1. I know short sales can take awhile to be approved. Has anyone been involved in one? How much time did it take to resolve?

2. Anyone recently purchase or sell a house that was already "short sale approved"? How long did that take?

Basically, I am just trying to figure out if there is a significant difference in time between the two and understand what others have experienced. Additionally, for anyone who has purchased, how successful were you in disputing real estate taxes? I have not yet been assigned a real estate agent (company contracts out the move) but I will in the future and would like to be armed to detect any BS. Thanks in advance.

 

[wizards8507]

I am being moved by my company and will be living in an area that saw some steep price drops during 2008-2011. Now, this simply corrected an absurd run up from 2003-2007, especially new construction. The prices today are much more stable in the area and the population continues to increase. With that all said, roughly 25% of the homes on the market are short sales.

My questions are this:

1. I know short sales can take awhile to be approved. Has anyone been involved in one? How much time did it take to resolve?

2. Anyone recently purchase or sell a house that was already "short sale approved"? How long did that take?

Basically, I am just trying to figure out if there is a significant difference in time between the two and understand what others have experienced. Additionally, for anyone who has purchased, how successful were you in disputing real estate taxes? I have not yet been assigned a real estate agent (company contracts out the move) but I will in the future and would like to be armed to detect any BS. Thanks in advance.

You're looking to PURCHASE a short sale, correct? Not short-sell your own home?

 

[wizards8507]

See below for my timeline. The home was short sale approved at $150,000 but we offered a fair amount less, plus asked for some concessions from the seller on closing.

Offered $142,500 - 9/7/11
Offer accepted by seller - 9/8/11
Offer accepted by attorney managing short sale - 10/28/11
Closing date - 12/5/11 (could have been sooner, pushed out at my request)

 

[tadman95]

The bank holding the mortgage has a lot to do with it. Some are pretty slow. You can google it when you find out the lien holder.

 

[Ndaccountant]

You're looking to PURCHASE a short sale, correct? Not short-sell your own home?

Correct

 

[wizards8507]

Correct

If the market has largely recovered in the area, you might not be getting enough of a benefit to go through the potential headache. When I got my short-sale, we bought it significantly undervalued (up $30K since we purchased two years ago).

 

[Southside Sully]

I am a realtor.. It all depends on the bank.. It can take up to 9 months or longer. Usually the seller gets the ok from the bank to try and market it as a short sale, and then once the seller makes an agreement to sell the house, they have to go through the process to have the bank accept it. It takes a LONG time to get one. If they are already bank approved short sales, it takes about the same time as a traditional sale 30-60 days barring inspections and attorney review periods.

 

[wizards8507]

I am a realtor.. It all depends on the bank.. It can take up to 9 months or longer. Usually the seller gets the ok from the bank to try and market it as a short sale, and then once the seller makes an agreement to sell the house, they have to go through the process to have the bank accept it. It takes a LONG time to get one. If they are already bank approved short sales, it takes about the same time as a traditional sale 30-60 days barring inspections and attorney review periods.

Nine months!? I closed in 3.

 

[Southside Sully]

Nine months!? I closed in 3.

My last short sale I negotiated for a buyer took 9 months to close.. Chase was the bank.. They are the worst to deal with on both sides of the transaction.

 

[wizards8507]

My last short sale I negotiated for a buyer took 9 months to close.. Chase was the bank.. They are the worst to deal with on both sides of the transaction.

I didn't doubt you but wow, that's nasty.

 

[Wild Bill]

I purchased one last year. It was not short sale approved. The offer was made and accepted by the seller within days, pending short sale approval by the bank.

The bank countered my offer and requested 10% more (still short of the mortgage balance). I made them a final offer for 1% more than my first offer and they accepted. The whole deal took less than three months. It was quick.

I've been involved in other short sale transactions that weren't my own and my best advice is to hire an agent with extensive short sale/foreclosure experience and do not wait around for a lien holder that is dicking around - just move on to the next property. It's somewhat surprising, but a lot of these short sale deals fall to shit b/c of the appraisal. The seller's mortgage company hires anyone with a pulse to "appraise" the property. Generally, these appraisers are paid next to nothing so they can't afford to do the legwork (you know, actually going to the property to determine the value). Instead, they drive by the property and rely heavily on the comps in the area. The half-ass appraisal is used by the bank to counter your offer. Even if the buyer is willing to pay, the financing implodes b/c the financing bank's appraiser, who more than likely did some research, found that the property is worth less. The deal either falls apart or the buyer comes out of pocket to pay what their bank isn't willing to finance.

If you're going to buy a distressed property, my suggestion would be to buy a foreclosed property. If it's going to be owner occupied, you'll more than likely be eligible for financing, you'll close quick and probably find a good deal.

One more piece of advice - avoid properties with a second mortgage, HELOC, etc. They are a nightmare. There was some fed legislation recently passed to alleviate some of the issues with respect to short sales and junior mortgages, but I'm not sure if it has helped.

 

[Irish#1]

I am a realtor.. It all depends on the bank.. It can take up to 9 months or longer. Usually the seller gets the ok from the bank to try and market it as a short sale, and then once the seller makes an agreement to sell the house, they have to go through the process to have the bank accept it. It takes a LONG time to get one. If they are already bank approved short sales, it takes about the same time as a traditional sale 30-60 days barring inspections and attorney review periods.

I purchased one last year. It was not short sale approved. The offer was made and accepted by the seller within days, pending short sale approval by the bank.

The bank countered my offer and requested 10% more (still short of the mortgage balance). I made them a final offer for 1% more than my first offer and they accepted. The whole deal took less than three months. It was quick.

I've been involved in other short sale transactions that weren't my own and my best advice is to hire an agent with extensive short sale/foreclosure experience and do not wait around for a lien holder that is dicking around - just move on to the next property. It's somewhat surprising, but a lot of these short sale deals fall to shit b/c of the appraisal. The seller's mortgage company hires anyone with a pulse to "appraise" the property. Generally, these appraisers are paid next to nothing so they can't afford to do the legwork (you know, actually going to the property to determine the value). Instead, they drive by the property and rely heavily on the comps in the area. The half-ass appraisal is used by the bank to counter your offer. Even if the buyer is willing to pay, the financing implodes b/c the financing bank's appraiser, who more than likely did some research, found that the property is worth less. The deal either falls apart or the buyer comes out of pocket to pay what their bank isn't willing to finance.

If you're going to buy a distressed property, my suggestion would be to buy a foreclosed property. If it's going to be owner occupied, you'll more than likely be eligible for financing, you'll close quick and probably find a good deal.

One more piece of advice - avoid properties with a second mortgage, HELOC, etc. They are a nightmare. There was some fed legislation recently passed to alleviate some of the issues with respect to short sales and junior mortgages, but I'm not sure if it has helped.

I've not been involved in a short sale, but from what I've heard the advice from these two is spot on, especially the advice on mortgage holder. Sometimes they may want to hang on for a little longer hoping for a better offer.

"Move on" if they drag is smart. You may like a house, but keep the emotions out of it if possible. As stated there are plenty of homes out there.