Foreclosure in Hopewell>Question Details

Deb, Home Buyer in Mercer country

Short sales. How desperate is the owner to sale? I am looking at a house that is a short sale and want to

Asked by Deb, Mercer country Sat Feb 9, 2008

I want to offer 75,000 less then asking price on a short sale listing. What do you think? What is the process for a short sale and should you use an agent who is very experienced in short sales?

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A short sale is about what the BANK will accept - NOT what the owner will accept. The owner can accept any amount - but the bank is the one taking a loss - NOT the owner. The BANK MUST approve it.
What is the asking price? 75k seems very aggressive; but without knowing the sale price; it's hard to say.

The reason a abnk would accept a short is IF - they can recover more than a foreclosure on the property would. Most short sales are NOT approved and the property goes to foreclosure.

Having an agent experianced ini short sale is VERY important. There are many questions to ask and most agents do not really know where to begin.

For more advice/questions - feel free to contact me directly.
2 votes Thank Flag Link Sat Feb 9, 2008
Hey Deb,
I've been meaning to once and for all put an end to Short Sale discussions. I did this for you, but also for all my clients, so I wouldn't have to spend an hour explaining it. It took me 3 hours to write, so hopefully you will like it.

Bottom line, only 1 in 20 Short Sales close, and those are almost always near list price. So $75,000 off? Well it depends if it was overpriced by $100,000, but most likely No way in Hell.

Hope you like the post. If you do, sign up.

Frank
1 vote Thank Flag Link Wed Feb 20, 2008
Frank is a blunt with his answer.... but like it or not - there is a lot of validity there. Banks are not nice people. They are bean-counters. Everything is black and while; dollars and cents. If they can make the company and extra 5k; they will.

First off; From the research I have seen coupled with my own experiance; most "Short Sales" that are advertised as such - the listing agent and sellers have not even contacted the bank and asked if they would even consider a short sale. - NOT A SHORT SALE.

For a bank to even consider a short sale; there must be a REAL hardship. Hardships does not mean - want to move and can't sell for full price- does not mean I can't flip it or want to move to Florida to retire or take a new job. It means - I was layed off - my spouse died - I was in a major accident and cant work for a year.

IF the seller gets an "OK" - it is just an "OK" we will "consider" a short sale. Then 3 months later you submit an offer and bank decides yeah or nay. It doesn't matter what they said initially! Why? THEY ARE THE BANK.

As I said before; the only reason they would accept less is if it will cost less than a foreclosure.

Also; you need to be pretty sure that the 1st lien holder wants to get all their money. In a foreclosure - the 2nd lien holder often gets zero; whiole the 1st lien holder gets most, if not all.

In a short sale; if the 1st gets 100% and the 2nd will get at least 5-10%; you have a good chance of getting your offer accepted.
1 vote Thank Flag Link Tue Feb 19, 2008
Fake because the bank hasn't approved the price. They mislead the seller by saying "We will consider a short sale IF you make your payments." 3 months later, the bank says "Nah, but thanks for the extra $10,000 that you made in mortgage payments... sucker."

I will showcase exact stats on my blog here shortly. But only 1 in 20 closed when I last did my research. And to try to get $75,000 below an already low "fake" price, is a pipedream.

But Deb, some buyer agents will sign you up... why? Because they will let you have fun trying to lowball and hope that you eventually come to your senses, and they get the deal.

Frank
1 vote Thank Flag Link Tue Feb 19, 2008
95% of short sales are FAKE!
Yep, FAKE. Only 1 in 20 goes to an actual closing.
Focus on REOs and Bank Owned.
1 vote Thank Flag Link Tue Feb 19, 2008
I just closed a short sale last week as a listing agent. It is a tedious process but well worth the wait for buyers. The offer bank is willing to accept is usually 5-10 % below the BPO'S & Appraisal. If the offer /listing price is more than 10% lower than the BPOS & Appraisal banks are more likely to foreclose. It also helps if 1st & 2nd are held by the same bank.
A lot depends on the listing agent who prepared the pacakage for the bank. If it is complete normally you will here with in 45 days.
0 votes Thank Flag Link Tue Feb 19, 2008
Hey Jim:

Can you explain a little more about your experience with short sales? I would love to hear your experience.

I have not seen any that are FAKE(!). I have a theory about why banks are not accepting all of the them - or sometimes with relatively little loss- but I have seen several, some up to 100K loss to the bank go through.

pat
0 votes Thank Flag Link Tue Feb 19, 2008
Thanks, J.R., for speaking up. My motto this past year has been, "greed is a terrible thing." I think our housing market and economy would be alot healthier ( and happier) if both buyers and sellers took more of a win-win view of things. Sellers who refuse to live in today (or perhaps lived it up - on their home equity- yesterday) and buyers looking for blood have soured me on a career I have been building for the past 10 years. What's a girl to do!?!
0 votes Thank Flag Link Sun Feb 10, 2008
I am very disappointed in this line of questioning. "How desperate is the owner." I come across some buyers who ask me this question and I have to shake my head. I realize we want to determine owner motivation but this question makes a buyer look like a salivating wolf.
0 votes Thank Flag Link Sun Feb 10, 2008
The previous answers are good ones, yet I have to disagree with Jim. I am seeing the majority of short sales being approved. It is all dependent on the combination of factores: amount of loss the bank is willing to take, financial strength of the buyer, local market conditions, philosophy & practices of the lending institution (i.e small credit unions look at short sales differently than large banks), etc....

I say: you never know until you ask... BUT do be prepared to wait 2-3 months for an answer. short sales are not for the impatient.
0 votes Thank Flag Link Sun Feb 10, 2008
Jim gave a great overview of short-sales. To add to that, check out the link below which provides additional information on short-sales and the process in general.
0 votes Thank Flag Link Sun Feb 10, 2008
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