Home Buying in Phoenix>Question Details

Anne-marie O…, Both Buyer and Seller in 85023

short sell offer or trustee sale?

Asked by Anne-marie Olson, 85023 Sun Jul 13, 2008

i made a short sale offer on a house 4 months ago ($330k offer on $320k first mortgage). After 2 months, they countered at $350k because they wanted to cover a portion of a Home Equity carried by the same bank who owns the first mortgage. I agreed, but asked for 3% of closing costs. After another 2 months, they finally agreed. The house is set to be sold at a Trustee's Sale on August 5th " . . . pursuant to the Deed of Trust which had an original balance of $313k executed by . . . . ".

So, my question is, why pay the bank $350k, when i can wait a few weeks and very likely purchase the house for several thousands less (I'm thinking I'd have a good chance if I bid $320, which ironically was my original offer). I know it won't be easy and i'm not exactly sure how to go about it. The sale will take place at a lawyers office and I have emailed the representing lawyer asking what would be expected of me in order to bid on the property, but thought i would ask here for any other info here

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I would be advised that normally when a home is in a short sale situation, multiple offers have been made to the bank, so sitting back and waiting for the Trustee's Sale could allow another offer to get accepted and move the sale date back. A good agent will be in communication with the bank through the whole process to make sure that the Trustee Sale never happens.

I highly recomend having an agent help in any purchase, especially with distressed properties.
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1 vote Thank Flag Link Tue Jul 15, 2008
AT the trustees sale you will need cash within 24 hours, I would not recommend for someone inexperienced to buy at the auction. When the home sells at auction the second will be wiped out, which means that the first lien holder gets the house and they are only out 313k. The banks counter seems to me to be a fairly bad one unless the comps justify their counter. However from what it looks like to me, you will be better off having the bank take the house back at auction and then buy it on the open market when the bank decides to put it on the market. Yes you would have to move out, but if you can save 40-50k on it, I definitely would.
Web Reference: http://www.TeamKearney.com
1 vote Thank Flag Link Mon Jul 14, 2008
I love the way everyone is all about blaming the banks for the way short sales are handled. There are some important things to remember. The short sale department is diffferent from the foreclosure department which is different from the second department.
The reps that are handling the foreclosures normally have in excess of 500 files on their desk at any given time.
They are trying to minimize their losses and we will all pay for these losses in the end.
The trustee sale is simple but normally for the big boys. It takes a $10,000 cerified check to register for the sale and the balance is due in cash within twenty four hour. There are "wholesalers" that buy as many as 20 homes a month each. The sales I have attended they tend to shy away from homes over the $300,000 mark.
If you have a confirmed deal with the bank, arranged to pay for it ,that they approve, checked the title for any other liens, like taxes, then I would do the deal.
Remeber normally the second can also bid on the home but that doesn't happen often and in this case probably not at all. If they win the bid they would have to pay off the first to control the property.
The last purchase I watched was a first of $317,000 and the buyer got the home for $225,000. Great condition, beautful home, golf course lot with a pool. There was six bidders.
If you play the trustee sale game you have to be able to lose the home and buy a different one. You will never know if you are going to be out bid, the bank pulls the home at the last minute or postpones the sale to another date.
Good luck, hope you get your house.
1 vote Thank Flag Link Mon Jul 14, 2008
Maria - she did mean offer with a purchase contract. Short sale negotiations in Arizona with the lender can easily last months after the contract is accepted by the seller. And we don't typically involve an attorney here.
1 vote Thank Flag Link Sun Jul 13, 2008
I can't believe you are getting ready to spend over $300,000. without having your own representation. Everything that Carlos said is correct. Pay particular attention to the part about inspecting the property and having your own representation. While you probably have very good reasons for believing the property is worth what you are thinking of paying, a realtor can determine it's fair market value using objective data. Also, when you say you made an offer, you must mean that you had a verbal conversation with the sellers or their attorney, right? You didn't actually write an Offer To Purchase? I ask because, in this price range, 4 months seems a long time to be still negotiating the contract.
1 vote Thank Flag Link Sun Jul 13, 2008
Anne-marie,

You might very well be right. But there are several consideration you need to take into account. Depending on the value of the property and the bidders who show up it may or may not go for under $350k. On a short-sale you can inspect the property and cancel if you find something unexpected. On a trustee's sale you do not have a right to cancel due to inspection. If you have already inspected the property or if they give you the chance to inpect prior to bidding on the trustee's sale you might be covered. Anothe factor to consider is that most trustees sale will require a cash purchase, you will have a maximum of 48 hrs to come up with the cash. If you do not have the cash in hand you will loose the down payment.

There are many factors you need to consider on a trustee's sale. Rather than asking the lawyers who represent the bank (seller) find an experienced Realtor who will be looking for your best interest and not those of the seller.

Good luck!
1 vote Thank Flag Link Sun Jul 13, 2008
Carlos and Maria,
Thanks for such quick responses!! There is more information I could not include in the original question because of space. First, I know the owners of the house who moved out of state at which point i moved in and started renting (after selling my house). So, i feel comfortable on the value of the house. Second, I am represented by an Agent who did provide a FMV based on comps. Yes, i did make an official offer (the original $320k), but the rest of the negotiations were verbal. To Carlos's point, i have contacted my lender to ask about the cash within 48 because that concerns me.

I believe the reason the bank didn't jump at my original offer is that there is a 2nd on the house in the amt of $80k and they were trying to recover their loss as well. My offer completely covers the first. I do think they (Wells Fargo) have been extremely negligent on this offer and my realty company has actually said they won't enter into a short sell with them again. Meanwhile, I'm trying to figure out if i just go ahead and pay $350k so i don't have to move (though i never unpacked) or if i go for it (the auction).

Oh, and i've asked my agent if she feels comfortable representing me through this sale; i want to make sure i've got someone with the expertise to advise me so i hope she'll offer someone else if she can't offer that.
0 votes Thank Flag Link Sun Jul 13, 2008
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