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Curious, Other/Just Looking in 22202

I am about to put an offer on a short sale, when do I have to list my current house?

Asked by Curious, 22202 Sun Feb 3, 2013

I am about to put an offer on a short sale, but am hesitant to list my house up for sale until I get a formal/informal readout from the bank whether the house I am purchasing (short sale) will likely get approved at or near the price I offered. At what point should I list my house? My realtor thinks that the contract we offer should state I will list my house 7-10 days after the contract is ratified. My concern is that I may go under contract on my house, then something will fall through on the short sale and we will be forced to move. Also, should I be concerned that because I will be in a time crunch to settle selling my house within a compressed time period that I may have to take a lower offer?

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Answers

6
Curious,
These are very good questions that need to be weighed very carefully. The short sale approval process can take months and then still months to close once you have approval. Some banks are improving, but the process can also be slowed down by the Seller not turning in all of their paperwork in a timely manner. This scenario does have its risks and you are very smart to be considering them all and not rushing into anything.

I would discuss this and your concerns at length with your Realtor. If your Realtor does not specialize in short sales, get with his or her Broker to discuss. They are there to help you.

Best of Luck,
Kim
1 vote Thank Flag Link Sun Feb 3, 2013
Kim helped us sell our home through a short sale. It was a lengthy process, but she stayed on top of the bank to get our deal done. She has good advice.
Flag Sun Feb 3, 2013
Dear Curious,

Your purchase contract (to insure your position) should include an addendum called Contingencies and Clauses that stipulate your purchase does not go through without coinciding settlements for the sale of your current home. That being said the bank may not even look at your offer, not wanting to entertain that contingency. If you have to sell to buy, this is your best option when considering a Short Sale.

Also, you would have to make an effort to offer your home fore sale, but also include that it is contingent on your purchase of a Short Sale Property. You may not get anyone interested in also waiting for the Short Sale to be approved and go to settlement.

Your best bet is to find a home that will settle in the normal amount of time without a third party decision. That in itself is a feat that some would rather not encounter unless your home is extremely desirable.
1 vote Thank Flag Link Sun Feb 3, 2013
Do you need to sell your house in order to buy the short sale? The safest route would be to acquire the new home first and then sell the current house.

(If I was representing the short sale seller, I wouldn't take a contract that was contingent on the seller selling his house after final approval. The approval is only good for a certain amount of time and if there were any complications with your side, the short sale seller could be sunk. Extensions are usually granted, but there is no guarantees.)

If buying without selling is not an option and you move forward, be very careful to protect your deposit and right to void the contract. Once that approval is given and you sign off on the third party approval, you need to perform to the contract and seller can go after the deposit if you go into default.

Overall, get a game plan together with an experienced agent you trust. They will make sure you are covered. Contact me if you would like.
0 votes Thank Flag Link Thu Mar 14, 2013
Preceding answers have discussed (correctly) the many uncertainties of short sales. In addition to timing, there is the possibility that the lender won't go to settlement even if you have a ratified contract. I hope you have an alternative place to live temporarily in case you need it. If you need to sell your present house in order to buy the short-sale property, you should indeed include that contingency in your offer to the short-sale lender . . . but anticipate that your offer may well be rejected in favor of offers without that type of contingency. The current real estate market at least is your friend if you need to sell relatively quickly, because (at least in many areas around DC) we have a shortage of inventory, and properties are moving quickly if they are appropriately priced. If the property is desirable and is relatively low-priced, you may even get a small bidding war that brings up. "Appropriately" here doesn't mean unrealistically low; it means don't overprice the property.
0 votes Thank Flag Link Sun Feb 10, 2013
This isn't a simple answer. Until the short sale is approved by the lender(s), you won't know if the sale is going to go through or not. Even if you get an informal ok, things can happen. If your realtor can ask the listing agent on the short sale for whatever information they may have on the approval process for the lender that might help you weigh things out. Even if the bank approves the short sale, until settlement occurs there can always be some slip that might create an issue. So, you probably need to weigh out the risk and reward. If the purchase of your short sale home is going to be contingent on the sale of your home then you will need to make some commitment to sell the house but because a short sale complicates things, I might consider using some language making the listing of your home contingent on approval by the lender of your purchase. After you list your home, You may also want to consider adding some language to the contract of your buyer saying that completion of the sale is dependent on the completion of the sale on your new short home sale. That would mitigate your risk of being homeless but also potentially reduce the number of buyers willing to make an offer on your home.

Jane Jensen
Century 21 Centurion Producer
NVAR Top Producer
571-228-5656
janejensen@comcast.net
0 votes Thank Flag Link Sun Feb 3, 2013
Are you working with an agent? These are great questions for the person you're working with. A short sale can take months to get to closing even after the bank approves it. Your agent can tell you how fast your home should sell based on the market as well as what you should sell for. You can also talk to your agent about possibly renting it if it does not sell.
Use your agent. This is what they get paid for.

Misty Mount
Long and Foster Realtors
540 903 6686
0 votes Thank Flag Link Sun Feb 3, 2013
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