Home Buying in Woodstock>Question Details

ash567, Home Buyer in Woodstock, GA

Short Sale - What are our odds?

Asked by ash567, Woodstock, GA Sat Oct 13, 2012

My husband and I are 29 years old, completely debt free, have 20% in the bank, both have credit scores in the 800 range, and just made an offer on a short sale in Woodstock. This is our first home offer ever (we've been saving and preparing for the past 5 years), and I have been doing a ton of research. We offered significantly less than the asking price on the home (about 25K less, to be specific), but the owner was about to be foreclosed on, so he accepted & sent it to the bank for approval. What are our odds that this might have a chance in heck of getting approved? We love our agent and have complete confidence in all of the info that he has provided us...we know we shouldn't get our hopes up, but we wanted to take a shot. Local comps have recently sold for anywhere from right on target with our offer to 50K more than our offer (literally, all within a mile radius). The lender is a very small, out-of-state bank. Any thoughts? Pearls of wisdom?

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about a snowballs chance in heck if the list price was pre-approved by the banking entity...as Ron said if you are lucky enough to receive a counter offer be prepared to sit down with your realtor and go back with a realistic offer....
1 vote Thank Flag Link Sat Oct 13, 2012
Depends on the bank AND if there is only a first mortgage. Most of the larger banks such as Bank of America, Wells Fargo, have a bottom net that the investors will take. They won't negotiate as suggested by a previous agent if they have a pre-approved price. They will just turn down your offer and you will have to re-submit. Some smaller banks may take a lower offer but if its not anywhere close to an appraised value they won't. It just depends on how bad they want to get rid of a property. The other variable will be if there are liens against the property. I had a bank accept the short sale offer but the lien holders wouldn't release their liens or negotiate a payoff. ( one was for a repossed car!) Minimum you are looking at is 60 - 90 days to close if the short sale has already been pre-approved AND you offer that price. One thing that buyers are failing to realize is that usually the price its listed at IS a great price! Good luck!!!
0 votes Thank Flag Link Mon Jan 21, 2013
The bank will be unlikely to accept much less than market value of the home, if you low balled them, you may have a very low chance of approval. You should have assessed what the home was worth and offered that amount. You should have included your comps with your offer to show how or why you offered what you did. banks are unlikely to cancel a foreclsoure auction if they are within 30 days of auction as the cost and time to start up again is too great oif the offer is too low.
0 votes Thank Flag Link Sun Jan 20, 2013

With the information provided and predictions offered would be pure speculation. There are loads of important issues associated with short sales that can be determining factors.

Being realistic, if your offer is significantly below the current area comps, you can expect the lender to counter your offer. This is when you find out if your agent really knows their stuff by being able to justify your offer in terms of recent market activity and condition of the home.

In the event, you have information that justified your offer amount, it may be best to provide this information to the bank sooner than later. Anything is possible but you should be prepared to assume a position that defends your offer.

Good luck,

0 votes Thank Flag Link Sun Jan 20, 2013
Short sales take a long time. Your agent will guide you through the steps I am sure.
0 votes Thank Flag Link Sun Jan 20, 2013
There are a pile of variables that impact every short sale, there's also a consistent factor: the lender(s) will complete at least a broker price opinion and maybe an appraisal to ensure they are getting an offer reflective of the market. As noted, the days of scoring a big kill are all but over - at least where anyone wants to live.

I often get called to appraise short sales under contract, most buyers are trying to roll 7's and score a deal but it's getting much harder.

Web Reference: http://www.hmtatlanta.com
0 votes Thank Flag Link Wed Oct 17, 2012
Dear ash567. If the property is in a desirable area and in good shape, chances are you are going to get a counteroffer at higher price from the lender. Short sales are not "deals" outside of the normal range of likely market value that many buyers believe them to be. All of these properties are appraised by the bank before a decision is made and that appraisal will be based on most recent comparable sales in the area - same criteria that is used for an owner occupant sale, a HUD home, or a Homepath property.

There are exceptions but without knowing much more about this particular situation I am responding solely on the basis of valuation considerations. Good luck.
0 votes Thank Flag Link Sat Oct 13, 2012

If the bank does not except your offer, they will more than likely make a counter offer.

We are in a temporary sellers market because of low inventory. I have been seeing multiple offers on properties as well. That is keeping home sales at market value. The one advantage you have is that you are considering short sales and many buyers are not.

Some of the larger banks now have a mandate not to further devistate the market by accepting or listing for less than fair market value on short sales and foreclosures.

Best of luck!
0 votes Thank Flag Link Sat Oct 13, 2012
Unfortunately the days of being able to low ball as short sale and/or foreclosure are gone in most markets. If you are serious about buying this house, consider having your agent make another offer--one that is more in line with the market comps. Best of luck to you!
0 votes Thank Flag Link Sat Oct 13, 2012
Thanks, so much to all who have responded. Yeah, we know it's a long shot. We are trying to prepare for a more realistic counter-offer by continuing to put my entire paycheck into our savings between now and then (since we have no debt, it's easy for us to do). We do know, at least, that there were definitely not multiple offers on this house. The only reason the buyer even decided to accept our offer (low as it was), is due to the fact that this was his last-ditch effort before foreclosure. Part of our contract stipulated that there were not multiple offers (and we, in turn, cannot back out until the bank counters). I hope this helps to clarify. I really value and appreciate your insight in taking the time to respond. Every little piece of information that I can gather helps!

Flag Sat Oct 13, 2012
The realty is about foreclosures and short sales is that the seller (banks/gov't.) are very aware of the market and what a home is worth so while you can get a bit of a "deal" it ultimately comes down to the appraisal that the bank has done to assess what they think is a fair market price.

While I would not get your hopes up, lots of things factor into this process. Time it has been on the market and the specific condition of the property you are buying are a couple if things. this is a sellers market for the last few months in the ATL area, so we are seeing less available inventory and multiple bidders on properties...law of supply and demand! In addition, short sales can take some time to complete, especially if you start out too low...best of luck in your first home!

Rick Musto, Managing Broker
Buckhead Home Realty
0 votes Thank Flag Link Sat Oct 13, 2012
Great job on having 20% to put down. As for the sale, there is really no way to know. The seller's mortgage company has to follow their short sale process. A lot will be determined by how much their appraisal comes in at. Being accepted by the seller is only one step in the process. It is my no means an indication the transaction will ultimately close.

Right now, many properties are seeing multiple offers and selling for over list price.

Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing
0 votes Thank Flag Link Sat Oct 13, 2012
Low-Ball offers haven't worked for some time now; particularly with the Banks:
They are prepared to sit it out and wait for a recovery.
I think you may have outsmarted yourself on this one.
I can just imagine the conversation between you and your Agent as you were discussing your OFFER.
The LISTING PRICE should have allowed for the Shortsale situation; but you chose to discount it further.
If you're lucky, the Bank will come back to you and ask for your Best-and-Final Offer; you will then be able to make a reasonable offer.
In the best of circumstances; you just bought a house for a ridiculous price.

Good luck and may God bless

ps. Do you think that just because they are a small out-of-state bank, that they don't know what they are doing?
0 votes Thank Flag Link Sat Oct 13, 2012
Hi Ron,
Thanks for taking the time to respond. We know that they will counter - we aren't expecting them to give us the house for 25k less...we just couldn't afford the full asking price right now (although we are going to keep banking my current paycheck until we get word from the bank...we will have substantially more to counter with when they do come back to us with a decision...we just needed the extra time to accrue it between now and then). To answer your last question, I didn't at all mean to imply that I thought that the small, out-of-state bank wouldn't know what they are doing. I had just heard that sometimes it easier to get through a short sale with smaller banks or credit unions (i.e. a greater chance that the realtors on both sides can actually talk to a real person, or be present if they send out a BPO....). I have heard that some of the bigger banks (SunTrust, BOA, etc...) are much less likely to entertain lower offers or to communicate with all parties involved.
Flag Sat Oct 13, 2012
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