Are short sales hopeless? We are under contract for one, but is there any real chance we'll get the house?

Asked by P.k., Phoenix, AZ Wed Nov 11, 2009

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32
The Urban Te…, Agent, Phoenix, AZ
Fri Jan 8, 2010
Nice answer Carl. We've found that short sales have a lot to do with a person's tollerance for the unknown and changing. As you certainly have found out, there is nothing certain or short about a short sale. Plus, a lot of the changes take place at the end of the transaction.

Glad you are having good results... we need more success stories to help people feel more comfortable. As you said, short sales can be great deals when done right.

Best to you... Gene
1 vote
Deborah Madey, Agent, Brick, NJ
Wed Dec 23, 2009
Every short sale is different. Each lender (service) has their own internal procedures for approval. A servicer may handle loans for hundreds of investors. Each investor has individual policies for approval. Add another dimension.....the listing Realtor.

As a buyer, you are distanced from the approval process and so is your Realtor. What you can assess is the competency of the listing Realtor. If the listing agent is able to answer your buyer agent questions about the status and provide updates, that will provide you the needed insight into the transaction. If the listing agent is not proactive, you are driving with a blindfold and hoping it works out.

As a buyer agent, I ask the listing agent a lot of questions. I relay the answers to the buyer and discuss the lisitng agent's handle on the situation. In some instances, I suggest buyers stay the course. In other circumstances, I suggest that the buyer move on. The listing agent's ability to manage the short sale process coupled with the buyer's ability to be flexible are key to the advice I provide. It is always the buyers decision to proceed or not. Even if I think we are driving blind, we forge ahead with every effort to make it go, if that is what the buyers want to do. It is my job to provide information and then heed the directives the buyers establish once they make an informed decision.

Yes, there is a real chance you will get the house. Hundreds and thousands of short sales have closed in just the last few weeks....everywhere. They do close.
1 vote
P.k., Home Buyer, Phoenix, AZ
Sat Mar 20, 2010
We close on the house next week :-)
0 votes
Tonya Brobeck, , Everett, WA
Sat Mar 20, 2010
Just noticed the date....oops so did this deal close? I saw they accepted the offer;-)
0 votes
Tonya Brobeck, , Everett, WA
Sat Mar 20, 2010
Yes, there is a real chance you will get the house. There is also a chance you will not. The best way to know is to find out the closing % of the listing agent. I wouldn't suggest interviewing the listing agent, they can say all they want. I would have your agent pull the listing agents stats right out of the MLS. The amount of listings, cancels, failed sales, solds, and pendings are right there. Also is there a 3rd party negotiator involved? Who is the bank? All these are factors to pre judge the potential of a short sale being able to get to closing.

Best of luck P.k.
0 votes
Azrentalhome…, , Phoenix, AZ
Sat Mar 20, 2010
A good agent whom specializes in short sales will be able to get you an answer within 45-60 days. However, the only issue is that the listing agent needs to specialize in short sales and that agent will be working only for the seller in most cases and not you, the buyer. So, your agent really needs to interview the listing agent to find out if they know anything about short sales.

http://www.ISellShort.com
http://www.AzReoPro.com
Web Reference:  http://AzRentalHomes.com
0 votes
Maureen Thel…, Agent, Phoenix, AZ
Sat Mar 6, 2010
Thanks. 5 months probably seemed like an eternity to you and to the seller. That amount of time is longer than it should be but is far less than some of the worst short sale approvals (or sometimes rejections) have taken. 5 month is also more than most buyers are willing to wait. I spoke to an agent yesterday who had submitted 5 contracts (1 at a time as it should be ) over the last 18 months only to have the seller's lenders start the entire process over and then take so long on each review that all 5 buyers walked away, and all this while market values have continued to decline. If only the banks, especially those who are among the biggest businesses in the world, would approach this from a basic business-like perspective, the situation could be improved significantly. Good luck to you on a smooth closing and hope you enjoy many years in your new home!
Web Reference:  http://www.urbanpremises.com
0 votes
P.k., Home Buyer, Phoenix, AZ
Fri Mar 5, 2010
Thanks! :-)

The seller accepted our offer mid-October, so it was it a little less than 5 months. The seller had two mortgages on the home, which of course played a part in the amount of time it took to get the deal worked out.
0 votes
Maureen Thel…, Agent, Phoenix, AZ
Fri Mar 5, 2010
Congratulations on the short sale approval on the home you will soon be buying! Your patience has paid off. There are lots of short sales out there about buyers who got frustrated and walked away, sometimes on the very day that the sort sale approval is finally issued. If I may ask, how many loans does the seller have on this home and how long did your deal take from the time you and the seller agreed to the terms until the seller's lender(s) said okay?
0 votes
P.k., Home Buyer, Phoenix, AZ
Fri Mar 5, 2010
Well, it took about 5 months, but we got the approval on our short sale yesterday!! It was definitely worth the wait and we are so thrilled. We're getting a great house for a great deal and I just want to thank everyone for the great answers and words of advice. I'd say to anyone else out there that short sales can be frustrating, but soooo worth it in the end. Thanks again everyone! :-)
0 votes
Alicia, , Phoenix, AZ
Fri Jan 22, 2010
P.K,

It has been some time since you asked your question and I wonder if you have seen any movement on the short sale? When I work with buyer's I give them the unvarnished truth-this is can be a long, frustrating and confusing process OR it can close relatively quickly. In my opinion, much of the outcome can be tied to the lien holders short sale processing methods. Some lenders are very efficient, others are not.

Since many of my buyers are now using the Home Buyer Tax Credit, I am recommending that they look at lender-owned and new build properties. Because the inventory levels are so high, I can usually find a comparable home.

I hope you had success with your home purchase.
0 votes
MrPrincipalR…, , Phoenix, AZ
Mon Jan 18, 2010
We negotiate Short Sales, the answer here will not be understood and the realtors here will not like what is to be said. Negotiation for the Hardship is only the first step, the negotiation for the purchase with the Bank is the 2nd and then 3rd is having the "Cash" soon enough to get the house. My company does successful Short Sales due to our non Realtor negotiator, with 35+ experience, the success is to find the right price, the tenacity to get the bank's approval and then have the "Cash" ready immediately. Again, we have found that few, there is some good realtors, less than 20% understand what it takes to successful deal with the Bank. So, if you want a successful short sale, find a full time short sale negotiator. Either you have a dedicated short sale company with a full time negotiator, the Cash ready to purchase and the tenacity to finish the deal or you too, may fall into the 80%. This is all we do, full time, we have our own full time negotiator, our own inhouse "Cash" and the means to complete every short we take on.
So, hire a dedicated company, not just some person who claims to be dedicated to short sale.
0 votes
Ryan Riedy, Mortgage Broker Or Lender, Scottsdale, AZ
Mon Jan 18, 2010
I wouldn't say they are hopeless.

I have 3 i am working on from November that are under contract and waiting on the bank's approval.

One got approval mid Jan, so i agree with AZrentalhomes.com.

If you want to get into the short sale game, you just have to be very patient, maybe even put in multiple offers.
0 votes
Azrentalhome…, , Phoenix, AZ
Sat Jan 9, 2010
Statistically, 1 in 3 short sale listings end up selling. However, recent trends show that short sales are becoming more popular and more buyers are closing on short sale purchases. Best of luck with yours.

http://www.isellshort.com
Web Reference:  http://www.azrentalhomes.com
0 votes
P.k., Home Buyer, Phoenix, AZ
Fri Jan 8, 2010
Thanks for all the helpful answers, everyone. We received word Monday from our agent that the bank has ordered an appraisal on the house, so things seem to be moving forward. We've only been waiting since the end of October and since we don't have a time table (where we need to to move immediately), waiting hasn't been a problem. In fact in the last few months, I've found a new job and we've been able to save money/pay off debt, which has been really good.
According to our agent, we will be getting a great deal and it's going to happen soon. Patience has been the best advice and again, you have all been very helpful, so thanks ! :-)
0 votes
Carl Coates, Both Buyer And Seller, Phoenix, AZ
Fri Jan 8, 2010
Short sales can be awesome if you do it right. Waiting for an approval can be a real bother but if you have a house that is already approved for a certain price you can close in 30 days or less.Your going to get a lot of answers that will confuse you. As an active investor here in Phx. we like shortsales and are always looking to sell nice homes below mkt value and we have already done all of the work. Once we market the home we sell it in 30-45 days
0 votes
Johnathan Mu…, Agent, Flagstaff, AZ
Wed Jan 6, 2010
I wouldn't say hopeless but rather tough. You have to be willing to play the banks game and be patient. The banks know when a property has interest it will spark other interest. So part of the wait is to see if they can get more money. Make sure your agent is still marketing your home and properly shopping offers. You are not pending until bank approves and your bank wants you to divulge offer prices to get more money. There are also other factors, banks are backed up (however its getting better and there are new things coming down to help), do you have a second? Is the second with the same bank, if so they can foreclose, that second note goes away and they can maybe make a profit. You think well why would they risk loosing money? Well there are write off s and bailout money and as mentioned maybe they can make more if there is a large second.

All in all most buyers are not patient enough to wait 6 months (sometimes up to a year or more) for a response and if the agent is doing it correctly buyers can be knocked out of first position while waiting. I would say 1 out of 10 short sales (in Flagstaff, AZ) actually closed last year, just a guess as the actually data is hard to track and will be easier in the new year.
Best of luck to all.
Johnathan Mullaney
0 votes
Alan Aly, Agent, East Brunswick, NJ
Sun Jan 3, 2010
Short sales usually = buying a home below market value as a reward for being patient.
It is all about staying on top of the lender and doing the regular follow up.
Even though your agent and attorney most likely don't have a way to contact the lender, you want to make sure they are following up with the home owners agent and attorney, who should have good follow up.
Finally, be patient :-)
0 votes
Richard Leci…, , Tucson, AZ
Wed Dec 23, 2009
Don't give up. make sure your agent is on top of it and stays in contact with the listing agent. It couldt take a few months
0 votes
Daniel Reyno…, , Scottsdale, AZ
Sun Dec 13, 2009
You have a 50% chance of closing a short sale. Even less if you don't like the price the bank counters you with. I would HIGHLY recommend staying away from short sales unless the listing agent and you're buyer agent ( that's me) know what they're doing.

Daniel Reynolds, Realtor®
Broker Executives, Inc

http://evmls.com
480-297-2008
daniel@brokerexecutives.com
Broker Executives, Inc
Web Reference:  http://evmls.com
0 votes
The Urban Te…, Agent, Phoenix, AZ
Sat Dec 5, 2009
Hi PK.

A lot of good information has been given. As you can see, there is good and bad with short sales. Each day the good gets better though.

Investor/Banks are slowing coming to an understanding that there is generally more financial benefit to a short sale verses foreclosure. The latest stats indicated the investor nets about 15% more on a short sale.

Another good stat is that more short sales closed escrow in the last few months than ever before. Most of this is due to the fact that the banks (actually loan servicing companies) have the infrastructure and staff to better deal with the complexities of a short sale. On the back side they are a VERY convoluted transaction.

Depending on who the loan or loans are with will determine much about your success.

We have a web site dedicated to providing information about short sales that may provide more answers. I know you are working with another agent, and we simply offer our site as a place to gain knowledge. Go to http://www.short-sale-phoenix.com or use the link below.

I'd say your chances of success, in general, have never been better.
0 votes
Maureen Thel…, Agent, Phoenix, AZ
Tue Nov 17, 2009
After working on short sales as both the listing agent and the buyer's broker, I believe every short sale is different. Most take close to 2 months to secure approval, some take way longer, and some are rejected. The best chance you have is usually on an offer that is at current market value, ideally with only one lien, and with the seller having a true hardship. A lot of it comes down to the individual negotiator(s) at the seller's lender, even within the same bank. Some are great and some leave a lot to be desired. You just have to be ready and willing to wait for the process to take place.
0 votes
P.k., Home Buyer, Phoenix, AZ
Wed Nov 11, 2009
Thanks again everyone. You've all been very helpful and I appreciate the advice. :-)
0 votes
Jeffrey Masi…, Agent, Scottsdale, AZ
Wed Nov 11, 2009
Dear PK:
I know it is frustrating.

The other name for a Short Sale offer? "Wait Long Offer".

Why? Even if your offer is fair, the real negotiations, after the bank even picks up the file (months), take place as the seller and the bank(s) negotiate on how the difference between the amount that the seller is 'shorting' the lender is going to be handled. A no, partial or full write off is negotiated between the parties. The sellers hardship and their future earning potential take more of an important role than your offer.

Many buyers get frustrated and just walk away during this wait. There are so many good buys out there on normal properties and foreclosures that, unless you just LOVE the short sale home and are in no hurry, it may be time to move on.

Did you know that the State of Arizona has a free GRANT MONEY program of up to 22% of the selling price if you live in a foreclosed home for 5, 10, or 15 years? This makes buying some foreclosures, even with fix up needs a really good deal.

If I can help you with your home buying decision or grant money, I would be pleased to do so. Take care and good luck!

Regards, Jeff

Jeff Masich, Realtor®
Arizona Homes and Land

http://ArizonaHomesLand.com
480-556-0940
jmasich@usa.com
HomeSmart Real Estate
Web Reference:  http://ArizonaHomesLand.com
0 votes
Jim Mitchell, Agent, Tempe, AZ
Wed Nov 11, 2009
Hello P.k.

Here's a follow-up to your questions...

Q: "Is it true that even though we're under contract the lender could still approve someone else's offer and not tell us about it?"
A: No. Not true. So long as the seller and his/her agent are in compliance with the law. Once the seller has signed/executed your offer and sent it to the lender for review, that's the ONLY offer that can be sent in. The listing agent cannot advise his seller to execute more than one offer; think of it this way: the home can only be sold once and to one buyer, therefore only one contract can be signed by the seller.

Q: "Can our agent find out who the lender is?"
A: That shoud have been one of the first questions asked of the listing agent. There's a list of banks out there that will give you a good idea of how long the process might take. B of A is likely to be a 12+ week process, whereas Wells Fargo is typically 4-6 weeks or less. It varies greatly between the lenders.

Q: "I've been told that the longer a short sale has been on the market the better your chance is of buying it. Any truth to that?"
A: Sometimes. IF there is a 'Notice of Trustee Sale' recorded with the county, that means the clock is ticking. This will usually spur the lender to act a bit faster, as those short sales take priority over the short sales that are fresh to the market and do not have a sale date posted. Also, the listing agent can sometimes make the case with the lender that his/her listing has 'weathered the storm' so to speak, and didn't receive a flood of offers in the first week as so many properties do in our market, therefore it needs to be sold at a reduced price. Compiling some solid market data as evidence of this statement will go a loooong way to getting the lender to respond positively.

Hope this helps!

Jim Mitchell
Century 21 All Star, REALTORS
0 votes
Kris Burnell, Agent, Oro Valley, AZ
Wed Nov 11, 2009
Yes, it is very likely you will be successful in your short sale offer, however you must be very patient. It can sometimes takes weeks or even months to receive a response from the lender. They are overwhelmed with short sales as well as foreclosure. If time is of the essence and you must move quickly, then short sales are not the right choice.
Kris Burnell, GRI, ABR]
Long Realty
10445 N. Oracle Ste 121
Oro Valley, Az. 85737
0 votes
P.k., Home Buyer, Phoenix, AZ
Wed Nov 11, 2009
Thank you all for your input. My realtor has 30 years of experience, including short sale experience. I feel like he's answered all my questions so far, but after reading some of these posts I'm getting concerned again. Our offer was accepted by the seller in one day and that was about a month ago. We knew that we would have to wait for a response from the lender and that's actually not a problem. I just want to make sure we know every possibility and every detail regarding short sales. I didn't know much about them when we started looking, so any additional information is extremely helpful. Is it true that even though we're under contract the lender could still approve someone else's offer and not tell us about it? Can our agent find out who the lender is? I've been told that the longer a short sale has been on the market the better your chance is of buying it. Any truth to that? Thanks!
0 votes
Keith Sorem, Agent, Glendale, CA
Wed Nov 11, 2009
PK
You need to sit down with your Realtor and go over your questions.

An experienced Realtor will answer your questions, and more important, will develop a plan.

For example, calling to ask when they lender will approve the short sale is good, but better would be to ask when they expect to have lender approval.

Ask for a copy of the title report, talk with the title company you want to use and evaluate the liens. Are any of those liens going to cause a problem?

If the owners are agreeable, ask to have your REaltor schedule a meeting with their Realtor and the sellers to discuss strategy. Sometimes you can find out things that might be holding up on the approval. One of my favorite questions is: What can I do to help move this sale forward?
0 votes
The Urban Te…, Agent, Phoenix, AZ
Wed Nov 11, 2009
You are not alone in your feelings. There are a ton of variables when buying and selling a home as a short sale and these many options are what make the process iffy.

On the good news front, many of the lenders are better equipped to handle short sales than earlier in 2009. Stats indicate that more and more short sales are closing escrow each month... not just the number of homes but the percentage of homes closing escrow is actually rising.

As Tonje said... patience is a big part of being involved in a short sale.


We have a nice Q & A section on our dedicated short sale web site that people are finding helpful.

Good luck.
0 votes
Richard Bazi…, Agent, Scottsdale, AZ
Wed Nov 11, 2009
Ask your realtor to conduct a complete interview of the short-sale listing agent. Your own realtor should have done that already. By asking the right questions, your realtor should have all your questions answered. Two of the many questions to ask would be: in what position is my offer? and where is my offer in the process.

I do a lot of short-sale as a listing realtor, and buyers and their agents always know where they stand. I provide weekly reports in writing so we cover every step of the way. I never have a problem knowing exactly where the short sale is and can predict with some degree of accuracy when it should close depending of where it is in the process.

Richard Bazinet - John Hall & Associates
0 votes
Tonje Kearney, Agent, Scottsdale, AZ
Wed Nov 11, 2009
Absolutely, but you need to have patience. They take time and if you expect an answer quickly, you wont get it. As Jim is stating, there are so many factors on a short sale that it is impossible to know how long it will take for an answer.
0 votes
Jim Mitchell, Agent, Tempe, AZ
Wed Nov 11, 2009
P.K.
It really depends on a LOT of factors...these are only a few...

>the experience of the listing agent IF they are also negotiating the short sale with the seller's lender (or is it a 3rd party?)
>the number of loans/lenders you're dealing with (2 or more with different lenders decreases your chances of success)
>which lenders are involved (Bank of America is the KISS OF DEATH right now...they are INUNDATED with short sales and UNDERSTAFFED at the moment, and have been for a LONG time; Citimortgage isn't much better)
>who owns the loan? Fannie Mae, Freddie Mac, VA, FHA, etc. etc. They all have different minimum's that they'll accept on short sales. (most want to net around 88% of the appraised value...NET is AFTER fees have been paid)
>does the seller have a 'true' hardship, or just 'walking away'?
>are there any unusual liens on the home? FED tax liens, child support liens, HOA liens, etc. etc.
>was the home priced correctly by the listing agent, or soooo low as to tempt buyers into making an offer, only to find out months later that it was WAY underpriced/undervalued when the lender get's their BPO/appraisal back?
>has there been a trustee sale notice file/posted yet? A lot of lenders won't get off their rear ends and start working the file unti this happens (Bank of America is top of the list when it comes to this)
>has the listing agent submitted EVERYTHING that the lender requires to even begin to review the short sale and order an appraisal and/or BPO?

As you can see, it's not for the faint of heart, just the buyers with the patience of a saint. Short sales are a LOT of work on the listing side, and they take a saavy and shrewd negotiator (listing agent) to get the job done.

Hope this helps!

Jim Mitchell
Century 21 All Star, REALTORS
0 votes
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