1. Most listings agents have no clue how to rep short properties
2. Most owners quickly tire of trying to work things out since they're inundated with nonsense
3. Most banks are combative at every step of the process
4. I'm convinced that banks make more by foreclosing - something has to explain the ridiculous delays and horrible process
5. I'm also a Fannie Mae appraiser - I see many of these homes just before or just after owners get into trouble - about half will be vandalized
6. If owners bail prior to resolution, issues like vandalism and mold can be issues - I'm seeing mold on a regular basis now - and it's everywhere.
Good picks are few and far between because there are so many moving parts on a short; listing agent, owner, lender, lawyers....all have to agree to a settlement. All will want to maximize price, so unless the owner bleeds you won't score.
In my opinion, I rather not deal with any distressed home - but if I have to I'd prefer one that's already foreclosed. Fewer issues and one seller to deal with - usually motivated. You might find this interesting -
Prices have come down so much. Appraisers are using short sales in their comps (because they have to!), so you're bound to find lots of listings from real people that want to sell, need to sell. If the banks want to play the 'waiting game' to the tune of 6-14 months, let them play by themselves and with themselves.
Scott Miller, Realty Associates, Boca Raton, FL
I gave Scott my vote for best answer, and he also sums up my feeling about banks handling of this whole matter. Short sales in my opinion are strictly for unbelievably good deals, and most don't fit that category. Short sales are primarily for investors who can make multiple offers on different properties and can wait just as long as the banks and at the end of the day, if the deal doesn't go through they are unaffected and just move on.
There are tons of good deals with already foreclosed Bank REO properties and even sellers who need to sell and are willing to forgo a lot of their equity. In this market there is no reason to allow a bank hold you hostage for months waiting to see if you will close or not.
Let me know if I can help you - I assist and represent "loan approved" buyer clients looking in your area.
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These types of things should be caught by the title company, and like Marge said below covered by title insurance if they were missed.
Whether or not the bank goes after the seller for certain things such as intentional damage to the home, well, I honestly think you can tell when you are looking at the home and see these damages. Banks typically find out through pictures of some sort, and if you are seeing the ceiling pulled down, or huge holes in walls in random spots, you might want to think twice and/or just walk away. There are plenty of short sales and good deals right now.
If you close on the property and then the bank goes after the owner (this is happening less because of law changes so the seller is more aware at closing) for damages, that shouldn't affect you as the buyer unless you were aware of what was going on with the intentional damage.
All deals are different, and if one seems odd or out of place, just go the next one. In my opinion there are great advantages to buying a short sale home, the biggest being the lower price you can get them for in some areas.
It really depends on the property and the deal. I tell my clients who are focused on Short Sales to consider all properties and realize that if we settle on a short sale, they have to be prepared for a long wait with little news. The only reason to buy a short sale and put up with all the frustration involved is when you love the property and you're getting a great deal.
I also advise my buyers to keep their eyes open and consider other properties as they come available. I write my short sale contracts with the ability to withdraw if the buyer elects while the lender is deciding.