The good news is, if you are't in a hurry - they can actually be worth the wait. I currently have a transaction pending where I am representing a first time home buyer and we are purchasing a Short Sale home. The home owner owes his bank around $204,000 - the bank told us that the minimum offer they would take was $165,000......we wrote it for $165,000 but asked them to pay our $8,000 in closing costs so their net is actually $8,000 less than the minimum they said they would take and we are getting a screaming deal!
When you are looking at either a bank owned our short sale home - the more homework you do and the more documentation you can provide to support your offer will help the bank in making their decision. In my scenario - I completed a formal Broker Price Opinion (mini appraisal that banks use) for the property and sent it along with our offer to substantiate our price and area market. I also belong to a website where I can check to see if a home is up for auction - banks would much rather work out a deal prior to auction than to have to foreclose as it's much cheaper for them, so if you can access that info - it will help as well. Any info you can find ahead of time gives you leverage when writing an offer.
As for purchasing a home before the end of the year.......now is a great time, especially if you are looking at short sale and bank owned homes because banks usually want these off their books before the end of the year so will respond a little quicker and negotiate a little more. And as for values in our market - there are always going to be homes of any type that are overpriced and that's not unique to bank owned/short sale homes. You just have to watch and be familiar with your market and trust your Realtor to help guide you through this process of finding the right home at the right price.
Best of luck to you in finding your first home!
Real Estate Broker, Residential & Commercial Financing Specialist
Commonwealth Group & DeMark Financial Services
415 17th Street, Suites 5-7
Oregon City, OR 97045
If you try to purchase a Short Sale home you need to make sure at least one of the agents are familiar with the process or are using someone who is, otherwise it can easily fall apart.
The banks will not call the agent to ask for missing paperwork. A fax can take days to make it from the machine to the loss mitigator. If someone is not on top of the deals, waiting for the bank will almost insure failure and hence many agents think they aren't worth the trouble.
The site below will answer most of your questions on short sales, foreclosures, bank owned homes, etc. Short sales can take months to close....and some stats say that only 35% of short sales are actually completed. If you have the luxury of time....and patience!....a short sale may work for you.
Janeese Jackson, Principal Broker
Real Estate Resource
One other thing I might add to what's been said is this. Even if you get an approval signature from the homeowner-they don't have final say in a short sale; the bank (3rd party) makes that decision-you won't hear from the bank in many cases until you find out they totally ignored your offer and allowed the house to go to someone else or to the auction. The don't play by standard real estate protocol. They are not obligated to put their rejection in writing, and they don't have to abide by the contractural time limits-although if they don't respond to your liking you're free to pull your offer. You also may not know that others may put offers in... even if you got an acceptance from the homeowner...and are also waiting to hear from the bank. The listing agent of a short sale is supposed to show all offers to the bank, and can get approval on more than one from the homeowner and must present them all to the bank, who then will be the one to approve one or none. With several offers it could still go to auction if the bank didn't like the offers.
At the auction, often the bank bids on the home themself to get it back and will then relist it as a REO rather than take a low-ball offer. This scenerio happened to one of my buyer clients; what a long process that ended in them looking elsewhere after all those months of waiting. We then learned the home was back on the market, as a REO at the price we offered. If a property comes to be relisted as a REO you would have to start over with your offer. A buyer who is short on time, as you are, should look at the existing market of financable homes and avoid the short sale listings. If you have nothing but time (and patience) then it may be worth your while if you don't mind rejection, disappointment and being frustrated by delays.
A good deal can be had in this market for those not in a hurry, and with an investment mindset...(willing to wait out the steal-of-a-deals). Personally, I've chosen to refer all short sales to a company who does only that- The experts who dedicated all their time to them and hire employees to make the calls (hours on the phone required for these).
Best to you.
Great questions. I am sure many buyers are asking themselves the same thing.
Short Sale is when the seller is not able to sell for the property for the amount of the lien(s) on the property and has to a.) bring money to the table, or b.) needs the bank to help them figure out a solution so they can sell the property. Short Sales are not bank owned property.
Foreclosed home has gone through the process of removing the title from the previous owner(s) and the investor has taken title by force. Most cases this is a bank such as Wellfargo, Chase, Bank of America ect....
The bank sells the property without warranty or disclosure. These are not always "deals" as one thinks. It's very situational.
I would never discourage anyone from making an offer on a property that they like, but would never encourage a client to look at properties just because it was listed as a "short sale" or foreclosure. In most cases you will find that even when in a "short sale", it is still priced out of market. There are plenty of resales available in the market with people who are able to sell for market value because they actually have built equity in their property the old fashioned way....time and payments.
Remember, its your hard earned money. You have permission to do with it what you choose. Your Realtor is a person you have hired to give you objectionable and personal perspective on your choices/decision. I would recommend listening to them and then deciding what is best for you.
Best of luck,
Condos, Lofts and Townhomes
Pearl, Downtown and South Waterfront