Home Buying in Natomas Creek>Question Details

M. Christo, Other/Just Looking in Sacramento, CA

We are putting in a full-price offer on a short-sale, but it has a trustee sale date for a month away.

Asked by M. Christo, Sacramento, CA Sun May 25, 2008

The property is unoccupied and in some minor disrepair. It's been on the market as a short for 120 days. Trustee sale date is mid-June. I keep hearing shorts take months and months, but we have less than a month. Any chance they'd forestall the trustee sale/auction to let us close? If not, how long does it take for them to put it back on the market as a REO?

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The chances that the bank will pull the rug out, are not small, Sue A and Elizabeth W have both experienced having a bank pull the rug out from them. I have heard of this happening to others as well.

I admire Elizabeth's optimism that it is a small chance that she will get burned again. I don't agree with that assessment. IMHO, even a small chance of losing the deal is a great risk after you have spent money on an appraisal, whole house inspection, and other due diligence costs.

I generally advise against offering on short sales. Most of them are hoodwink sham against the buyer, seller, and agents. A bunch of wasted effort and wasted appraisal and inspection fees is the usual result. There is a chance, -= A SMALL CHANCE - that a short sale will actually go through. The more probable route is that it will not be forestalled long enough, that it will go to REO and be marketed as an REO within a few months or a few weeks.

My research tells me that only about 1 in 12 short sale listings (Year 2007) became closed short sales. That means 11 failures to every success story.

I boldly predict that will improve substantially this year to a failure rate of only 70 to 80%. That would be a huge improvement in the success rate, yet it still leaves me wary.
4 votes Thank Flag Link Tue May 27, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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All of the answers already given are great advice. You just need to remember not to have your hopes up too high, in that there isn't a clear avenue to close your offer.

You don't mention if your offer is already accepted. Contractually, if your offer was not accepted in 3 days, you're already out of contract anyway, so even though you're still interested, it doesn't mean you're being considered. If it was accepted, I might still ask for a 'specific power of attorney' document, signed by the bank authority, stating that they are authorized to act for the bank in your sales transaction. The reason I say that is I have had the experience whereby we had already signed the documents for the loan and had recorded simultaneously to the house being put on the auction steps and sold to someone else. Different departments at the bank don't always talk to each other....

This is a very strange time right now, which offers opportunity but also some frustrations. Persistence will help.

The advantage to you right now is that you have already seen the house, evaluated its value, and can try to set up a contact with the departments in the bank. There's the loss mitigation department that normally handles it during the short sale. There's sometimes a loss prevention, or home retention department, and then there's the REO department. If you can get into the loop, sometimes (not always) you can get your offer known prior to them selecting an agent to list it. Once they take a home back, they could put it back on the market in a matter of weeks, or months. I haven't experienced a set period even with the same bank. If it goes back on the market as an REO, and listed by an agent, you can always resubmit your offer then. Put the home on your client portal and you'll know as any status changes on the house.

Hope this adds to it...Good luck!!!

Sue Archer
Realtor, GRI, ABR, SRES
The Galster Group
(916) 847-9686
Web Reference: http://www.suearcher.com
2 votes Thank Flag Link Sun May 25, 2008
Dear M. Christo: I agree with Elizabeth completely. My advice to you would be first, consult with your agent who should be in communication with the listing agent and get a feel for the viability of your offer being accepted and the status of the short sale approval. Depending on your agent's opinion about your chances and if they are not great, you can continue to look at homes. If you find another regular for sale home or a bank owned, your chances of getting your offer approved are much greater, of course, depending on the price and terms your offer. Then you can cancel your offer on the short sale anytime up until it is accepted by the lender.

I hope this helps. Good luck.
Web Reference: http://SoldbyErin.net
2 votes Thank Flag Link Sun May 25, 2008
Yes, the bank can definitely delay the trustee sale if your offer is in. The listing agent will need to stay on top of the bank to make sure that this is done. I've been seeing the decision to stay the trustee sale come a few days before the date because of the backlog in the loss mitigation departments.

It could be quite a while before it goes back on the market otherwise. I do not know California rules.
1 vote Thank Flag Link Sun May 25, 2008
Maureen Fran…, Real Estate Pro in Birmingham, MI
MVP'08
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