Foreclosure in Frederick>Question Details

Bill, Home Buyer in Maryland

I am looking at a short sale. I hear good and bad. Do the bank really do these in a timely matter?

Asked by Bill, Maryland Fri Nov 9, 2007

what percentage discount off list is reasonable? Do the bank normally pick up closing cots? What is a good strategy with looking to buy one of these?

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21
Patti Shawgo - Loan Officer, Grant Program Guru’s answer
There was just an article about this in the Washington Post and I have linked it below.

It is difficult to impossible to get a bank to consider a seller concession to help you with closing costs. They are getting their own appraisal of the property and if they feel like your offer is too far below what the appraised value of the property is they are going to be more likely to take their chances with a foreclosure auction. Hard to believe but it's true.

The owners who are choosing the list price for the property have usually done so independantly of their lender who is a breath away from owning the property. There is no real benefit to seller to sell a short sale, except for maybe saving face. Whether or not it goes to actual foreclosure, it is a foreclosure on their credit. Many times the lender would rather wait until they have full control of the property and then deal with selling it. This may change in the future since banks are not going to want to have a huge inventory of homes, but I haven't seen it up to this point.

Don't mean to rain on your parade. You can always try, but just be prepared for a bumpy ride.
1 vote Thank Flag Link Fri Nov 9, 2007
It could take up to 45 days for a bank to approve a short sale and they typically do not cover any closing costs. In addition the home is usually sold in as-is condition. For this reason you can usually expect to pay less than market value but by how much is going to vary from one home to another. You'll need to have patience to get through the process.
1 vote Thank Flag Link Fri Nov 9, 2007
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0 votes Thank Flag Link Fri Mar 28, 2014
Sorry, I just saw the other question.

There is no particular discount off list price, if at all. The condition of property and comparables drive prices. If a home is priced right for the condition, there may be multiple offers, depending on how much work a property needs. There are a lot of cash investors out there picking up the best deals because they can do a quick settlement, blitz the place for rehab and flip in 30 days.

Cathy Chapman, Broker Owner
Signature Home Sales
cathy@cathychapman.com
0 votes Thank Flag Link Wed Mar 26, 2014
Although this question is almost 7 years old, it is still relevant in today's market and fortunately, today is a better day than 7 years ago with lenders. They have finally developed processes and procedures to handle short sales in a timely manner. You can expect a Short Sale to take 90-120 days depending on how many lenders are involved. Trust that buying a Short Sale today is going to be a lot quicker than a Short Sale in 2007.

Lenders pay all fees in a Short Sale and in some cases, depending on the lender who holds the note, I've seen Sellers come away with cash for selling which is based on a law the government put into place for certain lenders to pay back a certain amount of money to their customers due to the bad lending practices that caused our market to collapse. I have a client who walked away with $3k through the HARP program and another $13k from Bank of America.

Call me if you have further questions.

Cathy Chapman, Broker Owner
Signature Home Sales
cathy@cathychapman.com
0 votes Thank Flag Link Wed Mar 26, 2014
Honestly short sales are not an experience for the faint at heart. They are the most complex and emotionally challenged real estate experience one can go through. No matter what advice you received from either a real estate professional or friend who has gone through a short sale, expect the unexpected. My team and I have completed a lot of short sales in the Frederick County and surrounding areas. Each one is different and riddled with new complications. The timetable is different for each one. What I can tell you is reliable is that fact that you must be flexible in every way! Trust only the very most experienced agent to help you navigate these complications and go to the drug store and buy a lot of tummy pills and migraine medicine! Being very experienced in real estate myself, I can tell you buying a short sale is very tough and you should be prepared for anything! In the end I have been successful in helping buyers purchase short sale but most people will say they will never do it again! Hopefully they are satisfied they got the home of their dreams with no regrets but they can tell you lots of stories!
0 votes Thank Flag Link Tue Dec 10, 2013
You can go to http://www.ownershipexpress.com/
877-312-1108 ext. 2032
0 votes Thank Flag Link Mon Jan 9, 2012
As a realtor, I would advise you to find a foreclosure instead. Short sales take usualy take way longer than we expect. You must first get the home owner to sign and agree to the contract. Then, the contract is sent to the bank where it is on someone's desk who is overworked and underpaid. The paperwork for a short saleli is horrendous. If paperwork is missing, the sale is "put at the bottom of the stack again". Get a good realtor and find yourself a foreclosure. You will be in your new home much quicker without the added grief.
0 votes Thank Flag Link Wed Apr 13, 2011
Even most negotiators on these short sales have proven this... there is no consistency. If anyone disagrees and promises you what will happen, get it in writing with a guarantee of refund or compensation for time spent. If you do proceed with a short sale, be patient.
0 votes Thank Flag Link Sun Apr 3, 2011
Well- Even though this has been a little outdated as a question the answer is still a NO-- The Banks still take upwards of 4-5 months to get an answer- some are getting better than others- Bank of America is getting better as I just had one done in 2 months- Chase- Wells Fargo and other larger banks are not too bad-- BUT you get to the MetLifes and others then look out- it can take 6-8 months or more- WHY? By the time they all get it together I think the storm will pass-
0 votes Thank Flag Link Sun Apr 3, 2011
Bill: My eBook about Short Sales answers all these questions and more. .
You can read it HERE: http://reallynicehomes.com/PDF/The_Short_Sale_Option.pdf
0 votes Thank Flag Link Sun Dec 28, 2008
I am a professional short sale negotiator, every lender is different, as is every scenario, not every short sale will be successful, but a key point in getting the lenders to even look at your short sale package is how it is presented, at this time many lenders are swamped with requests for short sales, however many of these packages are not thorough, which makes it difficult for the lender to seriously consider the low offers they are receiving.
0 votes Thank Flag Link Wed Apr 9, 2008
I submitted an offer for a CASH buyer a little over a month ago for a buyer- they wanted to go about 30K below asking price since the home needs some TLC and then some! The Bank took 34 days to even respond after 20 phone calls from the listing agent and they did not even counter back- "REJECTED"- they buyer and I were stunned- so we moved on to greener pastures- Banks are acting very unrealistic especially if they are from another state- they just don't seem to get it yet- but hey- in a few more rounds of that stuff and they will be calling me back to find out where that CASH buyer is!!
0 votes Thank Flag Link Mon Apr 7, 2008
I am seeing quite a few short sales being done in my area and many great deals being made by the Buyer. I have heard of banks taking large losses (100k+) and don't think any offer is unreasonable as the banks are flooded with inventory they want to get off their books. I think most importantly is to be highly qualified to purchase and to have an agent who knows how best to represent you to the bank and/or listing agent representing the bank. Having a properly written and thorough Contract of Sale is crucial in getting your offer taken seriously and to start the negotiating process. I think 30-60 days is a reasonable expectation to purchase as short sales are becomming very common and most banks are ready and willing to look at offers rather then increase inventory. I have seen them cover closing costs for Buyers, etc. This is largely dependent on how long the property has been for sale and how badly they want to unload it. Now is a great time to buy!!
0 votes Thank Flag Link Sun Jan 13, 2008
The term short sale in no way indicates the sale is completed in a brief period of time. Usually a minimum of 30 plus days to the long side of six month. Banks are not looking to discount as they are already taking a loss. They want to sell the property "as Is", no credit for closing costs and a market value.
0 votes Thank Flag Link Sat Nov 10, 2007
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
Contact
The banks are looking for market value in a short sale. If you are looking for a good buy you may be better off looking at a property that has been on the market for a while. One that was overpriced priced to begin with, the sellers bought it more than 3-4 years ago and they have equity in the house. You stand a much better chance of making a lower offer, asking for closing help and having it accepted and go through in a timely matter.
Web Reference: http://www.northropteam.com
0 votes Thank Flag Link Sat Nov 10, 2007
Susan G.,

"There is no guarantee but it is better than a foreclosure if you can accomplish it!"

Why is a short sale better than a foreclosure? I am a foreclosure moron.
0 votes Thank Flag Link Sat Nov 10, 2007
I just pult the wraps on a short sale negotiation today that took 5 MONTHS to complete. Frustrating! The banks are looking to maximize their $$$....if you submit an offer, make sure your agent submits it as clean as possible. Most folks think short sales are great deals...they are not always! The bak wants market value. Good luck!
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Fri Nov 9, 2007
Cindi Hagley…, Real Estate Pro in San Ramon, CA
MVP'08
Contact
Patience is the key! Your agent needs to stay in constant communication with the bank. I have had short sales that closed in 45 days and some that never closed in spite of having offers waiting. There is no guarantee but it is better than a foreclosure if you can accomplish it!
0 votes Thank Flag Link Fri Nov 9, 2007
I have heard of as short as 30 days, but mostly I have seen it take several months before the bank approves it. Meanwhile, you stay in limbo on that property.
0 votes Thank Flag Link Fri Nov 9, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
There is so much variation in time that banks act upon an offer - it can be almost immediate to never! I think it matters how much inventory they have and if they have a buyer of their own that they are trying to get approved to take over the property/loan!
If you have placed an offer, is all the things in place, letter from current owner to the bank, Brokers BPOs, an appraisers opinion letter, etc. If you are dealing with a Realtor that is experienced in short sales, they should know all thats required, but lately I have had many buyers come to me totally frustrated and my first call is to their Realtor and the first question is "how many short sales have you done?' Make sure your Realtor is experienced, or they will never get the bank/mortgge company to respond.

Bill Wootan
Web Reference: http://www.billwootan.com
0 votes Thank Flag Link Fri Nov 9, 2007
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