Home Buying in Chicago>Question Details

Julie, Home Buyer in 60614

How negotiable are short sales?

Asked by Julie, 60614 Wed Jan 12, 2011

and how long does a short sale take to close?

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Answers

29
As you can see there are no rules in negotiation. The bank will do a BPO-broker price opinion, which indicates the approximate value of the property. That is what the bank uses to determine what they are willing to accept, but there also seem to be internal factors within each bank that also play a part. The actual amount of the loan has nothing to do with it as banks know that the reality can often be 50% less or more.
It can take 2-6 months from the time you write an offer until the time the bank responds to hopefully agree. Once that happens the bank ALWAYS demand the closing to occur instantaneously........which is extremely irritating, but seems to be universal. So they almost always say close in 30 days...period!! Of course in this market it is extremely difficult to get a loan commitment and close in that time frame so your attorney will often have to ask for an extension of the closing for a few days or so and while it does not have to be accepted, I have never seen, or heard of, a bank saying no. While these banks are A-holes, they are not that big of one, so it should work out, but a bit of drama seems common.
2 votes Thank Flag Link Thu Jan 13, 2011
Do banks ever ask for money with the offer
Flag Mon Sep 2, 2013
A short sale with a complete package (including balance sheet, hardship letter, tax records, etc) could go as quickly as 30 days. A short sale without a complete package or an unqualified agent could take months. Remember the seller still owns the property but the investor must sign off on the final number. (They are taking the loss) It's an ever changing game and if the listing agent is not getting anywhere with the bank, you may not get anywhere.
Web Reference: http://www.teammateja.com
1 vote Thank Flag Link Wed Jan 19, 2011
Hey Julie,

Properties sell for what properties are worth. With short sales it is easy to get distracted by the list price, but with short sales, the list price is irrelevant in most cases.

If you are looking for an agent, check out the testimonial section on my site.

Best,

Ryan
Web Reference: http://www.ryangossett.com
1 vote Thank Flag Link Thu Jan 13, 2011
Each situation is different. The best way to see is to make an offer. Remember though, just because the seller sign off on the contract, doesn't mean the bank will. It takes a long time for the bank to respond, and a lot of times they will counter your offer. Just make sure you have an agent experienced in short sales and you will be ok.

Matt Laricy
Americorp Real Estate
Brokers Associate, e-PRO
Mlaricy@americorpre.com
708-250-2696
1 vote Thank Flag Link Thu Jan 13, 2011
Julie,

Every deal is different. Every bank is different. Each lender looks at the facts of the situation and not necessarily the list price. Some listing agents set an unrealistically low listing price to encourage a solid financial offer to present to the bank so they can get a response price from the bank. Then down the road they can market the property at that price if the original buyer doesn't want it at that price calling it a "Preapproved short sale".

There are a lot of agents out there working short sales that don't know what they are doing.

Depending on the situation a deal could close in 30 days but more likely its going to take 90 days or more and if you need to move by a certain date less than 120 days out you are definitely at risk of sleeping on a friend's couch for some time for many deals.

If you have any questions feel free to reach out to me at the any of the communication means below. Best of luck!

Eric Marcus ABR, CPA, CNE, CRS
Your Real Friend in Chicago Real Estate
Eric Marcus Real Estate Group
http://morechicagohomes.com
773-244-1110
esmarcus@sbcglobal.net
1 vote Thank Flag Link Wed Jan 12, 2011
This is a very complex question because there are so many different factors that make every short sale different. I think the most logical and realistic answer to your question is that is depends mostly on the bank you are working with. Remember, when you're dealing with a short sale, you're dealing with not only the owners of the house, but the bank as well. Which makes this situation that more complex. It's a fair question to ask the listing agent for an idea of how long the process will take, so hopefully you'll get the answer you want to hear!
0 votes Thank Flag Link Mon Jan 30, 2012
Pre-approved Short Sales close the fastest provided the seller or sellers agent submits all the documents requested by the mortgage holder. One of the large banks I deal with replys with in 1 week and the the closing can be done if accepted, with in 30 days but, you need an agent to help you with all this and a lawyer when you are going to close.
0 votes Thank Flag Link Mon Jan 30, 2012
Open ended question as every single real estate transaction is different. I can tell you this, a short sale listing is being listed at a price no one knows if the bank will accept or not. Banks are taking to 6 months to decide as well, why would they hurry? They are losing money and far as they are concerned, a better offer is right around the corner.

Best of luck.
0 votes Thank Flag Link Thu Feb 3, 2011
Short sales typically take much longer to negotiate and close, compared to a bank owned foreclosure. Every situation is different depending on how long the home has been on the market , has the paperwork started between the seller, bank, attorney and realtor etc.? All these factors come into play with these scenarios and many others. If you are planning on taking advantage of the $8000 Tax credit this year, you better get a move on. You must close on this home by November 30, 2009, and with closings taking 90 days plus you are running short on time.
0 votes Thank Flag Link Thu Feb 3, 2011
Julie
Short sale listings that are promoted as preapproved at asking price can be great buys! More banks are doing the BPO distressed appraisals before a contract comes in and telling the listing agent at what price point they will accept the loss on sale and price it right there. This means not very negotiable off of listing price, so come in at or close to asking price on those listings if you like the inside of the home. Plus banks encourage multiple offers when the home is a great deal from the start and priced at distressed BPO level. Have your agent do a buyer CMA and maybe it's OK to go in at asking price if sold comps easily support the asking price.

Even if you make a low offer that is accepted by the seller, there is no reason to think that the bank with 3rd party approval will approve that contract that that lower price once the BPO comes in. As mentioned before, they often counter higher than the signed contract, telling the buyer to pay more if they want the house after waiting two months for a response. That doesn't go over big with the buyer, buyer walks and the home is reactivated back to square one.
0 votes Thank Flag Link Wed Jan 26, 2011
First of all, this is a great question Julie. A lot of it depends on the company negotiating the short sale as you will find that a lot of companies claim to be "short sale specialists" and really have no idea what they are doing. In terms of how long it will take...this truly depends on how good the negotiators are, whether the process has been started before or after you submit your offer, what banks have the liens on the property, what the BPO/appraisal comes back at since this can really blow a deal, etc. If everything goes well, you should be able to close in 30-60 days. I am working on a bunch of short sales right now that can be closed in 30-45 days tops. Some can close in even less if the buyer backed out and the bank has already approved the short sale. Short sales are typically great deals. If they weren't, why would so many buyers and investors want to purchase them instead of other properties? Often times you will find houses or condos that have been totally updated, stainless steel appliances, hardwood floors etc that are worth a fraction of the price they previously were worth and what they will eventually be worth again. I could certainly go on, but if you really want more information, visit my blog http://kelseykarpshortsales.com. I have great information on there and work with a team who truly can claim to be short sale specialists. We have a group of very talented agents and negotiators who know how to get these deals done. Hope this helps a little!

Best,
Kelsey Karp
kkarp@jameson.com
http://kelseykarpshortsales.com
0 votes Thank Flag Link Mon Jan 24, 2011
My opinion is generally short sales bad foreclosures good... If you require a mortgage to buy a short sale, hard to rate lock, seller is trying to skate of the defficiency, the bank has hoops and hurdles as 3rd party approval. Plus likely you will stop looking while waiting and waiting so opprtunity cost of disengaging market is a real risk. Short sales are not better price wise either and it is not uncommon to have the bank counter higher than the buyer and seller signed in a contract. Unless a short sale is pre-approved at askinig price I would not recommend a buyer to go through the motions. Talk to your agent about REO's, in your price range in the targeted areas you are considering.
0 votes Thank Flag Link Mon Jan 24, 2011
Hi Julie,

Regarding timeline, realistically from start to finish, if all the stars are aligned ... the process takes about 3-6 months on average. When claims are made that a closing can occur within 30 days on a short sale, that only is likely if the property is already short sale APPROVED and the buyer is paying cash.

Bottom line on negotiating short sales? The final sold price is determined by what the BANK wants to NET on the deal. You can submit a low ball offer to see what that number may be, but if it is too low, the bank will reject the offer and not even bother to make a counter offer. However, if your offer is within range, you are likely to get an approval or a counter offer.

So find an agent that you feel comfortable with their knowledge of short sales. Ask a lot of questions.

All the Best,
Tina Ciaccio
Web Reference: http://www.tinaciaccio.com
0 votes Thank Flag Link Fri Jan 21, 2011
It all depends on how much money the lender stands to lose.
Web Reference: http://www.golftobeach.com
0 votes Thank Flag Link Wed Jan 19, 2011
Everything is negotiable since its a buyers market! Just be ready for the short sale process to take a while in most cases.
0 votes Thank Flag Link Wed Jan 19, 2011
Of course you can negotiate the price. The only difference is you are negotiating with the owner of the property the bank and the investor. Be prepared to wait because it usually takes over forty five days. So unless you can e patient and wait for an answer this will not be for a person that needs to move in right away.
0 votes Thank Flag Link Wed Jan 19, 2011
Remember, when you are negotiating the price and other terms for the purchase of a home which will have to be sold as a short sale, you are negotiating with the owner of the home - not with the bank. You will be making a contract with the homeowner/seller and then that contract will be subject to lender/s approval. If the lender does not approve the contract, then you don't get to buy the home. It's a balancing test - you want to negotiate a price for yourself as the buyer that is reasonable considering the amount of time and difficulty and patience (while waiting for the bank to approve - hopefully - the contract) you will be paying in addition to money for the purchase of the property - a price that is fair to you as the buyer but also approvable.
Web Reference: http://www.dreamtown.com
0 votes Thank Flag Link Mon Jan 17, 2011
Short sales are often already discounted by banks (according to the banks). Typically - and this comes from banks and experience on short sales, you can get 5-8% (maybe 10%) off the list price. Offering any less than 10% below list (in most cases) will make short sales take much longer.

As far as closing, it could take up to 5-6 months, typically. The key to faster (and that means a few months) is the buyer's offer has to be perfect and sweet for the bank, the seller has to be extremely cooperative, right on top of the paperwork and jump when the bank says. Even if they New legislation allows for a shorter time period, but the bank has to voluntarily agree to do it - and waive their rights to the deliquency forever. Seems like not a lot of banks are willing to do that, so we will see how many take the small incentive reward to do HAFA and require them to make a fast decision.

I recently just attended a seminar by BOA on short sales - and it seems more of the same. Nothing happens fast. But with a short sale, get an experienced broker who knows what they are doing. These short sales rules and tricks are changing all the time.
0 votes Thank Flag Link Thu Jan 13, 2011
Short Sales are just as negotiable as any property in today's market.

There are many pitfalls and hurdles that take committment and perserverance by all parties invloved. Experienced Realtors® and attorneys are more vital in these transactions than your typical resale. Also, consider that each bank's response time and each case is different, which adds or subtracts time to the processing of the short sale.
0 votes Thank Flag Link Thu Jan 13, 2011
Banks are often accepting around 80 percent of loan amount. Short sales are being approved anywhere from 60 days to more than a year, it just depends on how persistent your realtor and attornies are. If you are the seller, my recommendation is to call the bank or have your realtor call nearly every day and discuss how to get it done, don't let the file get lost in the bunch. A realtor I know did this and got one approved in under 60 days. If you're trying to buy a short sale, discuss with the seller's realtor or with your realtor who will be the person to call the bank every day, but persistence is key for a speedy approval.
0 votes Thank Flag Link Thu Jan 13, 2011
Hi Julie, I involve a short sale attorney right up front for my clients. He handles everything from start to finish and takes all liability off the Realtor and the buyer.

The Realtors in your area should know of a good short sale attorney that all of you can meet with.

I wouldn't be involved with another Short Sale without my short sale attorney. All of my short sale deals have
been going through and in just a few months. They remove a lot of the red tape.

Good luck! Jodi
0 votes Thank Flag Link Thu Jan 13, 2011
Lenders do not have the time to negotiate short sale asset mgrs. usually have approx. 5000 files they are working we recommend for our clients put your best last offer. However keep looking takes approx. 30 -45 days for a lender to respond IF THEY LIKE your offer.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Thu Jan 13, 2011
The circumstances are different for each transaction. I would put a reasonable offer in and see what happens from there! You will need to have a lot of patience.
0 votes Thank Flag Link Thu Jan 13, 2011
My experience in doing inspections for short sale properties is that there is probably very little room for negotiation in short sales. I represented a number of buyers looking for a bargain with the short sales and most them ended up putting in offers and having those offers fail to mature into a sale on many of those properties. Sometimes it would be as a result of issues ID'd during the inspection, but many times other issues related to pricing, financing, etc... would knock the offer out. A word to the wise, just like a foreclosed property is sold "as is" I would not buy a short sale w/o a good, thorough inspection. The home seller has been short on cash and most likely has stopped basic maintenance and probably has let some issues that other wise would be addressed slip.
0 votes Thank Flag Link Thu Jan 13, 2011
Julie;
1. Only one way to find out - write an offer and see what happens. Your agent will give you a ballpark idea of what the bank will be looking for; but it's your call.
2. When you've "had it up to here" with the waiting, add another 45 days.
Web Reference: http://www.321property.com
0 votes Thank Flag Link Thu Jan 13, 2011
Julie,

Without a doubt, this depends on the merit of each individual situation. The acceptable bank's selling price will likely be closely tied to the most recent appraisal or BPO information. This is often related to the debt associated with the property....first/second mortgage, liens, legal fees etc.

If your transaction is one that has not been approved by the lender you can most likely depend on the bank "bumping" up the sellers agreed contract price.
0 votes Thank Flag Link Thu Jan 13, 2011
There are no clear-cut rules on short sales. Basically, the bank wants to make sure that it will get close to the same money that it would get if it foreclosed and then resold the property. I could get into the details, but others here already beat me to it.
Web Reference: http://www.markmalave.com
0 votes Thank Flag Link Wed Jan 12, 2011
Your question is a good one. First you need to understand that the process of making an offer on a Short Sale is between Buyer and Seller except in this situation a Seller has no reason to counter the offer because they need third pary approval from the lender. The lender is the one who will counter the buyers offer.

So to answer your question, a buyers offer is negotiable because the lender may accept the buyers offer as is, counter this offer, or accept an offer that is less in certain circumstances. What determines a lenders approval of the offer is several things:

1. How close is the offer to the amount borrowed or owed on the mortgage?
2. How close is the offer to the current market value (BPO) value or Appraised Value?
3. Is the offer Cash of Financed?


Time to close a Short Sale has been discussed before. If it is a HAFA, FHA, Short Sale normal time to market a home is 120 days. If it is a traditional Short sale the process could take 6-12 months
0 votes Thank Flag Link Wed Jan 12, 2011
Hey Julie,

Short Sales are a major presence in our current market as you probably have seen. Unfortunately, there is no full proof answer to this question you have.

How negotiable the price of a short sale is depends mainly on how the home is priced. If an owner has a mortgage of 300k left on a home and the price is 275k on the MLS, then it is priced pretty accurately. There is probably more room in THAT price than if the home was price @ 199k.

The problem is that agents price them all over the board. If they underprice them too much, then they run the risk that the bank will reject the contract. The end all goal is to simply get an ANSWER from the bank, so most Short Sales are priced where they will get immediate offers. The sooner the contract gets submitted to the bank, the sooner everyone finds out what the bank will accept...

Which moves into your 2nd questions. How long!?!

Again...it depends. If there is one mortgage on the home, the general rule is that you should hear an answer in 3-5 months. if there are 2 mortgages from the same bank, then more like 4-6 months. If there are 2 or more mortgages from different banks then good luck! Time is defintely against you in a short sale.

Tell ya what...if you have any other questions, feel free to contact me via email and I will gladly help out. Assisting buyers in the purchase of their homes is my main job these days...especially with all the great 'deals' out there.
Web Reference: http://www.tedkuhlmann.com
0 votes Thank Flag Link Wed Jan 12, 2011
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