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Newhome, Home Buyer in Avondale, AZ

I am considering buying a short sale home. What do I need to be concerned about doing this versus a?

Asked by Newhome, Avondale, AZ Wed Apr 15, 2009

traditional home purchase?

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A lot of good information for you to ponder. Make sure and click on Jay Thomptson's links... he is a great writer and thoughtful real estate guy.

My basic problem with short sales is likelihood of you actually closing escrow and taking possession. The math stats are rather dismal. In April, the experts were telling me that only 6% of the short sales actually closed escrow. That means that over 9 out of ten don't.

Now lets add another less discussed factor. Most aggressively priced short sales have multiple offers presented to the bank. Thus, your offer will be considered against several others. If you are paying cash or have a conventional loan, you may be favored over someone asking for down-payment assistance or using an FHA loan product.

When you factor in multiples offers, the potential of your purchase offer being selected by the bank erodes the likelihood of you purchasing a short sale to far less than 6%. One analytics guy I talked with ran some numbers and concluded that any single offer has a 2-3% chance of success.

So... it is not impossible, yet keep in mind that you may want to continue your search while the banks do their thing.
0 votes Thank Flag Link Wed Jul 22, 2009
Hello,
I understand your concerns. VHB_S mentioned As-Is, & the need for an inspection. This is true but also true for the lender owned home or "REO" homes. You will be required to sign 2 documents; and As-Is Addendum & a Short Sale Addendum releasing the seller or Lennder of any liability for issues with the property should they be discovered. You can acquire copies of these documents to review from your agent or by visiting any agency office. Read them carefully so you understand what you are agreeing to accept. The problem with Short Sales is that each lending institution handles them differently so any general comments may not apply. Once the seller & buyer have both agreed on an offer the bank must also agree. The asset manager handeling the offer may change due to high turn over in that position-it is a minimum wage job with a lot of pressure- this only slows the process down. So, in closing, read all the materials carefully, get an inspection, & above all, be patient. If it is the house you really want, you will wait.

Good Luck!
0 votes Thank Flag Link Wed Jul 22, 2009
Like the others have said, you need to be patient. Most short sales take 6-8 weeks for approval. Plus, it is important the listing agent on the property is knowledgeable about short sales (or is using a professional negotiator to handle the process). Don't be discouraged by some of the comments below. Short sales do get done on a regular basis.

I've written several articles about short sales on my blog:

http://www.unleashthei.com

http://www.unleashthei.com/channels/home_selling/topics/shor…

I wish you the best of luck with your home purchase.
0 votes Thank Flag Link Thu Apr 16, 2009
Be prepared for not only a long transaction, but the likelihood (80-95%) that it won't close. Many/most times there is a second, or??? and in my experience the second does not like to compromise. If you have a choice, unless the short sale has a professional negotiator, go for the bank owned or seller owned.
0 votes Thank Flag Link Wed Apr 15, 2009
Well the house is probably as-is. Could be great, could be bad, could have hidden issues. definately have everything inspected, house, insects, sewer you name it. Herb
0 votes Thank Flag Link Wed Apr 15, 2009
Be prepared for a long transaction. Some short sales are lender-approved listing prices and they sell quickly, but the vast majority will have a long negotiation period with the lender.
Web Reference: http://SeattleHome.com
0 votes Thank Flag Link Wed Apr 15, 2009
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