I'm a little weary of some of the answers you're getting. Banks avoid risk like the plague. To broadly say that for a bank to take the chance that waiting for the sheriffâ€™s sale is going to give them the opportunity to somehow make more money later is ludicrous.
Fact - at least in Texas, banks don't "reacquire" their property at auction, theyâ€™re the ones who told the sheriff to auction the property in the first place. They want someone else to buy the property at auction for more than the minimum bid, which is typically how much money they had at risk (mortgage, fees and such). If no one bids on the property (and the bank is only going to bid against other bidders in very rare cases), then the bank keeps the property they came with, it isn't 'reacquired", and the bank isnâ€™t going to bid against itself.
If the bank had already forced the seller to try to sell the property, short sale, then the market has already considered the property at some price. I've yet to see a short sale ever listed at "full price". That is, "full price" being what the property could sell for if the seller was simply listing the property for sale with typical time constraints, not under short sale conditions. The market believes that a seller in a short sale situation should be willing to accept an offer below "full price", and thus the market offers less than â€œfull priceâ€.
If the property doesn't sell during the "short sale" offering, and the bank has to take the property back, and it doesn't sell to someone else at auction, it becomes REO property (bank owned, Real Estate Owned). The market perceives REO property in a similar fashion to short sales, that is, they shouldn't sell for "full price" because the bank itself has a time constraint on how long it can hold REO property (the amount of REO property a bank has on record limits their ability to fund new loans, reducing the number of REO properties allows the bank to make new loans and thus make more money). So I'm very challenged to see how a bank thinks that it can expect to sell an REO property at "full price" and thus takes this approach with the belief that they will "get all their money back".
There are rare occurrences where a home in a short sale is very distressed (some owners do weird things to their property when they know they are going to get foreclosed on) and the possibility exists to make significant money by fixing the place up and reselling it. But let me tell you, banks know they are not in the business to do this and avoid it, again, like the plague. Mind you, they do it occasionally, but they are much happier selling the property to someone else at auction and letting the distressed property be someone else's headache.
In the end, Cindy, please, get an agent who has experience in short sales and let them do a comp analysis to tell you what it's worth. No deal is a deal if you over pay for it, regardless of what the bank wants, what the listing price is, or what you're being told by people who don't have a vested interest in the outcome.
I know that there is a lot of buzz about "short sales." After many years of working as an REO broker I am convienced that there is a great deal of "mis-information" and myths circulating about "short sales."
First and most importantly, a property is worth what it is worth. I know that we have all types of sceintific approaches, formulas and the like. But generally speaking a property's true value at any given moment in time is what a ready, willing and able buyer is willing to pay and what a seller is willing to accept. That value often changes from one buyer to the next, from one day to the next, or even from one offer to the next.
Second. There is nothing that say's a bank or any other seller is required to sell a property for less than the current asking price or what they feel the property is worth.
Having said all that. Here are the basics steps involved in a short sale offer, and I want you to know that this is generally not a one or two process. Due to the steps that have to be taken this process sometimes takes 1-2 weeks or more. Understanding that most mortgages are not serviced by the actual investor or bank--it should be clear that once the agent presents the offer, it may have to go through a loan servicers collections department, then to the loss mitigation department, then to the actual lender and maybe even repeat that process before it even gets to someone or a department that can actually make a decision. The process does not stop there though, so let's look at the basic (minimum) steps that are involved in this process;
1) A buyer submits a witten offer, with proof of funds or qualification along with earnest money.
2) The listing agent processes and forwards that written offer and documentation to the seller. In this
case let's assume the seller is a bank.
3) Before responding the seller usually orders two to three independent opinions of value. This is done
either through full blown appraisals or broker price opinions or BPO's. This process alone can cost
several hundred to a thousand dollars or more. The seller usually has to bear t his cost, because at
this point you the buyer has absolutely zero dollars invested in the process so far!
All you have tied up in the process is some time an offer or letter of intent, your earnest money check
hasn't even been deposited yet.
4) After arriving at what they feel is the current market value, the projected seller's net and other seller
specific considerations, the seller will generally do one of three things;
a) accept the offer as presented
b) reject the offer
c) make a counter-offer
I will tell you that if your offer is ridiculously low, or you have requested unreasonable concessions, most sellers won't take you serious and will generally out-right reject your offer! Make no mistake about it, in today's market there are many well qualified buyers who are making fair offers and getting good values.
Another thing I want you to consider. If you are looking to purchase single family houses with the buy low or "low ball" and sell high mentality, I will submit to you that you are merely a spectulator and not a true investor. If this is your strategy I would suggest that you become more knowledgable with the capitol gains tax laws and rules.
I'm not being critical of your strategy, I am simply suggesting that there is a better way to invest in real estate. True investors take a more long term view and approach. They position themselves to take full advantage of the tax laws as part of their overall strategy. True investors invest for income, appreciation and tax advantages.
The seller's agent has no control over what the bank will or won't take. In fact - they don't even have a reasonable guess in that regard.
Get ahold of the office he works out of - and find somebody higher up the food chain in his firm. Sounds like somebody needs a trip to the woodshed.
Now - if the seller has an attorney that is required to sign off for some reason - this begs the question "why?". That would raise another red flag with me that there is some other issue with this property.
From the sounds of things, this will be a very long and drawn out process.
It could also honestly be a matter of a shady seller/agent trying to get more money out of you.
If they come back with some sort of offer like "if you were to go just a bit higher, i think we can get everybody on board.." you know it's a scam.
This really sounds like a lot more hassle and BS then could reasonably be expected in the vast majority of situations.
If you have a buyer's agent rep, it costs you nothing and protects your best interests. You would not have to rely on someone who's representing the seller's best interests and sounds like he is being totally unethical.
As far as saving the bank money, depends on how far along they are in the process. If they've already paid to file for the foreclosure, then they've already spent the money. If they haven't, then you've got a prayer. If it's in a short sale status now, obviously it's not been foreclosed upon.
Due to the overwhelming amount of foreclosures going on through the nation right now and Bank of America having to bail Countrywide out of financial trouble, it is extremely difficult, to put it mildly, for the average person to try and even get through to the bank, let alone try and negotiate a short sale with them! We have clients who sign over a power of attorney to us so that we can take that burden off their shoulders as they are literally in tears over trying to just get through to someone who'll listen to them. So, if the home doesn't sell at short sale, it becomes an REO property - or bank owned. Then, at the foreclosure sale, they will list it for what's owed on it and will try to re-coop filing fees, attorney's fees, court costs, etc. The bank will protect it's interests and start the bidding at a certain price. They may say they won't take less than x and if someone doesn't bid at least that, then it doesn't sell. Just depends on the bank and they'll give instructions to the trustee. Your best bet is to get the home prior to this point. You've got much more negotiating power before it goes into REO status.
Then, if it doesn't sell at the foreclosure sale, the bank's favorite investors and other clientele will see this list first before it will be listed by an agent. The agent will give the bank their opinion on what the house should sell for, but they'll probably call for a BPO (broker's price opinion) as well so that they have a rounded picture of what the comps look like in the neighborhood. Then, the agent will put the house on the market. What it will sell for all depends on the market and location. But, you can get around $40 - $50k off homes in Dallas. That's not unrealistic. It happens here all the time.
By the way, at the URL I listed below, you can see updated foreclosures in our area updated on a daily basis at no cost or obligation.
Happy to help,
Myke gave a great suggestion. You should also try to contact that Realtor's Broker and inform him or her. If you don't know who the broker is find out what company they work for, and where it is located at. Go to the main office or call and inform the broker of the situation. He will put that Realtor in his place and help it move along.
contact NAR http://www.realtor.org/ and file a complaint.
Realistically - the seller, or the seller's agent has absolutely ZERO say in whether or not your offer gets approved by the bank. The fact that the seller's agent is trying to inject themselves into that process is flat out illegal.
THE MOTHER PUT THE HOUSE IN HER NAME AND HER SON'S, BUT HE WAS TO PAY ALL THE BILLS. WELL HE HAD ALREADY HAD AN EVICITION, SO WHY WOULD YOU DO THAT?
HE DIDN'T PAY THE MORTGAGE. DIDN'T PAY THE TAXES. SKIPPED TO ANOTHER COUNTRY AND NOW SHE IS LEFT HOLDING THE BAG. SHE HAS HER OWN PROPERTY TO WORRY ABOUT.
well maybe the bank will counteroffer you and you can avoid all this.
but you already offered what it is worth. they can't ask for much more.
i thought the idea of the short sale was for the bank to take a loss and it goes against somebody's credit for 2 years instead of 7 in a foreclosure????????????????? these banks are trying to get every dime they can. greedy.
To start, we are currently leasing a house we have made an offer to buy through a SHort Sale. The owner owes somewhere around 900,000, but it's only worth about 500,000 now (CMV), so that's what we offered. Chances are, they're never going to get around to selling it "short" by the time the Trustee Sale happens in Aug, so we'll have to move out, it won't sell at Trustee Auction, the Bank will take it back, relist it(REO), then we'll have to bid on it against several other interested parties, and MAYBE we'll get lucky and get it. but there's NO guarantees. It sucks I know, but it is what it is. Better Luck with your situation. =)
There are two basic type of auctions. One is an "absolute" the other is a "reserve." In an "absolute" auction the property must go to the highest bidder without regard to the value of the property or the price being offered.
In a "reserve" auction the seller is generally allowed to set a minimum bid he/she will accept. This "reserve" amount is generally not made know to the public. Guess which type of auction catagory a court ordered or forced sale wll generally fall in?
Second, if and when a bank or governement entity such as VA or HUD re-acquires a property via a foreclosure sale, the amount they list the property for on the open market, has absolutely nothing-what-so-erver to do with what is sold for at auction!
The list price is driven by "supply and demand" and what the markert will bear. One fact that seems to be over-looked in this dialog is the fact that when a property forecloses, whether a bank ends up with it or not, the previous mortgage is no longer a consideration. Simply because at foreclosure a mortgage is disolved, and the collateral and the value of that collateral is now the only consideration. A mortgagee may be held liable for any deficit balance on the debt.
Also remember that there is still the issue of the mortgage insurance (FHA) and (Conventional) and mortgage gurantee (VA) which give the lender the right to file a claim should the aucton bring less than what they need to get whole. So, long and short....you should not give advice in areas you are not qualified to give advice in!
The best thing this lady can do if she can't get a response on the offer she made a couple of months ago, it to contact the broker of that office and he/she will in turn 1) Secure her earnest money for her and 2) get her the answers she is looking for. They may or may not be the answers she wants, but I am confident that the broker will work hard to see that she gets at minimum those things.
If the broker fails to do this, my next reccommendation is that she contact the real estate commission in her state for further advice. And that my friend is the best advice that you, I or any other licensed professional can give her!
she filled a cross complaint in the foreclosure to sue her son for money and to get his name off of the house. so who knows how long that could delay the whole process.
i wish it would go to action.
seems some foreclosures here have taken over a year to get to the auction block.
i wanted to purchase it on the short sale. i have no contigencies at all.
i have been watching the foreclosure in the court myself.
thanks for all your advice!
You might want to have your agent check to see if it has foreclosed since your offer was made. A foreclosed property does not always come back to the office that may have had it listed prior to foreclosure. In any event I still reccommend you contact the broker of the office holding your earnest money. He or she should be able to give you the current status of your earnest money, and quite possibly the status of your offer as well.
DOES THE OFFER EXPIRE EVEN WHILE WAITING ON THE BANK TO ANSWER???? (NOT MINE......I JUST WONDERED.
AND YES THEY CASHED MY CHECK.
DOES IT TAKE 7 WEEKS AND STILL NO ANSWER FROM THE BANK????????????
AND IF MY OFFER WASN'T PRESENTED, AND IT HAS BEEN OVER 2 MONTHS, I WOULD LIKE TO KNOW WHY I STILL DO NOT HAVE MY EARNEST MONEY BACK??!!!!
Paying over asking price can be a great deal if the property is underpriced in the first place. Asking price has nothing to do with a home's value. Have you ever looked at ebay auctions that start with an asking price of $1 and end up selling for hundreds or thousands?
Of course he had no idea what the bank would accept. In 99% of shortsales even the bank does not know until weeks after an offer has been presented to them.
My wife and I are members of Harris Real Estate University and their Short Sale Coaching Program (#1 in the country). It appears that there is a lot of mis-information out there about short sales and how they are successfully performed. Based upon my understanding of the process, the listing agent represents and works for the seller. When an agent agrees to work a pre-foreclosure listing, he/she obtains written authorization from the seller allowing them to speak with and deal directly with the bank or lender on the seller's behalf. This does not negate their obligation to communicate with the seller who retains all rights and authority over the subject home/property until it is sold (whether before foreclosure occurs to a buyer or investor or on the day of the sheriff sale when it goes to the highest bidder at auction).
The listing agent has a fiduciary obligation to present all offers to his/her client or seller. Seller can direct listing agent to or not to submit any and all offers to the bank, for whatever reason. If the listing agent in this particular instance is not following this protocol, ask for more information as to why they refuse to submit it. It could be that they already submitted an offer and are awaiting for an answer from the bank to determine what amount the lender will accept.
Hope this explanation helps. Email me should you have additional questions.
I'd suggest you take one of courses of action, sadly neither one is attempting to follow through with the purchase as it seems you have way too many roadblocks. Either walk away and chalk this up as a learning experience, or pursue a course of strategy to document the fact that you've delivered the offer to the agent and asked him to submit it to the seller for consideration. Delivery and your request to have the offer presented to the seller needs to be in a form that you can prove to someone else that you did this. Then file an ethics complaint.
Again, neither one gets you the house, but seems that's a real stretch at this point. Remember, document, document, document, everything you do.
he also claimed he had no idea what the bank would take even tho they approved the short sale.
$30,000 over the listing price................where is a good deal in that mix??????????????
The bank will provide a written approval letter to the seller telling them exactly how much they will take once they approve the short sale. You can ask to see it. It is easily possible that the bank wants more than the home is listed for. Banks do not preapprove short sales (usually). They don't even consider them until the sellers agent has an offer and submits a short sale package. I am closing on a short sale today where the buyer is paying 30K over asking price. That is what the bank approved.
There is a post below that should help clarify some of the uncertainties of purchasing a short sale.
SEEMS HE HAS TO GIVE APPROVAL ALSO.
WHAT HAPPENS IF THEY CANNOT LOCATE THE SON WHO IS CO-OWNER? DOES THE COURT ORDER HIM OFF OF THE PROPERTY LIKE HE ABANDONED IT? OR DO THEY TAKE MORE TIME SEARCHING FOR HIM??????? AND WHAT IF HE REFUSES TO SIGN OFF?
THEN IT HAS TO GO THRU THE FORECLOSURE AND THE COURT WILL GIVE IT BACK TO THE BANK?