Jane, Home Buyer in Waterbury, CT

I recently made an offer on a home that is a short sale, I offered the asking price and closing costs, does this give me a good chance for acceptance?

Asked by Jane, Waterbury, CT Tue Aug 24, 2010

I made an offer on a home that I founf that just went on the market 2 weeks ago as a short sale. I offered the asking price which was around 100k plus 6k for the seller to use for closing fees. I also am using an FHA loan. Does this better my chances of gettin this home and typically how long will this take?

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Hi Jane,

Every lender is different. Some can take a couple weeks to respond and some can take well over a month or more. I'm assuming when you wrote this you made the offer to the seller and the seller of the property has already accepted and your short sale package was then submitted to the lender? If you're asking if the seller of the property accepted I would hope you would know that by now. After the seller accepts, the offer is put together and sent to the lender.

If your agent is on top of things, they should know if the package was submitted. I've seen homeowners (sellers) hold up the process because they weren't prepared with all their paperwork. The listing agent and your agent should be working together to let you know if the package was sent already. If the homeowner hasn't pulled together their paperwork, be prepared for a bit of a wait.

The lender will have the final say on whether the price is acceptable. That can depend on many factors. The biggest factor is whether or not a BPO has been done on the property. BPO is the broker price opinion. That is the broker that values the property for the lender and if the broker price and listing price are vastly different, it could cause problems. If it's a HAFA short sale, the LENDER sets the price for the property and if you offered listing price, your offer should be accepted with ease. If it's a traditional short sale, the BPO is typically performed by someone in the local area. HOPEFULLY that's the case. I've seen cases where the lender hires someone outside the local area and there can be a pricing discrepancy between the listing price and broker price.

Scott makes a good point about the loan. If your loan is FHA it could be problematic. Usually the appraisal process for FHA loans is much stricter and if the home is being sold as is, that's a problem. Many times the bank will require fixes to the property to get the loan approved and if it's being sold AS IS then there is where the problem could lie. Although that really doesn't affect if your short sale will get approved which was what your question was. The short sale COULD get approved but you may have the loan restrictions. Most lenders will allow you to close beyond the 30 days, but there could be a penalty for that. You may have to pay a per diem rate daily. It's tough to gauge.

I think a 203K loan is GREAT if a property needs work. It still falls under FHA guidelines but if there are things wrong with the property, it shouldn't hold things up.

Keep us all posted. Hopefully you will hear soon.
1 vote Thank Flag Link Mon Aug 30, 2010
Jane there are several things you need to know and consider with a short sale. First a short sale is not guaranteed to ever get approved and can take 3-6 months on average to complete, so you need to have time and patience. Second the most common killer of a short sale is price, you want to make sure that asking price was at or near market value, some agents will cut the price in half to attract more buyers, the bank will have an appraisal completed and will only approve a short sale at or near market value, so if your price is to low, despite what the asking price was, it could be denied.

The next problem is you are gong FHA, you need to make sure the house can get a fha mortgage, there are checklists you can get online or from your loan officer. if the house needs work, it may not pass and being a short sale the seller wont want to pay to fix anything. Lastly fha takes 45 days to close on average, the bank usually wont give mor ethan 30 to close a short sale after approving, so you need to get everything done on yoru mortgage so when you do get approval, you are good to go, there are some costs and there is a gamble if it doesnt get approved.

Make sure your buyer agent keeps constant contact with the listing agent or negotiator for the seller.
0 votes Thank Flag Link Fri Aug 27, 2010
I believe that offering full price makes you a good candidate. Adding the closing costs should really make them happy. Generally, if the seller likes your offer (which they certainly should in this case), they will accept it and forward it to the bank. If the bank approves it you will be on your way. There are supposed to be new streamlined processes for getting answers quickly from the banks, but that doesn't mean it will happen the way it should. So you might still have to wait a while for an answer. Hopefully, though, you won't have to wait as long as people waited in the past, sometimes 6 months or more. I think it sounds like you've got a great shot at getting this, especially if there haven't been any other interested buyers. The Realtor should only forward the offer they accept to the bank. The listing agent should also be able to tell your Realtor if there are any other offers in that they are considering.

Good luck!
0 votes Thank Flag Link Tue Aug 24, 2010
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