Home Buying in San Diego>Question Details

Kalusimbu, Home Buyer in San Diego, CA

The odds for short sale approval.

Asked by Kalusimbu, San Diego, CA Tue Nov 6, 2012

We made an offer on the short sale that is about 6 to 10 percent below market value. The offer was accepted by seller and submitted to lenders. The primary lender is paid off and the negotiations are going on with secondary lender. The secondary lender is getting about 24 percent back and has to agree on a 180k loss. The secondary lender got the appraisal done and we are waiting for their response. Does this scenario appear favorable? Can we hope to get this closed soon?

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Sounds pretty good. You might get countered at a higher price from the 2nd lender.
If you tell us who the 2nd lender is, that will help us give you advice of chances of success.
Some lenders are easier to get approved than others.
As long as you have an experienced listing agent on the other side, you should have a 90% chance of success.

Kevin Sanderlin
Keller Williams Realty
Cell 858-212-4702
0 votes Thank Flag Link Tue Nov 6, 2012
As the foreclosures rate remains high. more banks are agreeing to sell properties for less than loan value to recoup some of their investment and assist homeowners in avoiding foreclosures. Just wait for their response they may come back with the approval. Normally banks give 20 to 30 days after the approval to close the transaction.

Best of Luck,

Maria Cipollone

Century 21 Tenace

2 votes Thank Flag Link Wed Nov 7, 2012
First, 24 cents on the dollar seems very good. The deals I have closed average around 6 cents on the dollar for the second lien holder. Looking at the bigger picture, has the seller documented hardship? Has the seller been denied a loan modification? Has the first lien holder filed a NOD and are they prepared to foreclose? I believe the answer to these questions will determine the probability of the short sale closing.
Good luck,
1 vote Thank Flag Link Wed Nov 7, 2012
It sounds like the process is moving forward in the usual manner. Offering any suggestion as to the probability of your getting final approval is pointless as it would be little more than a guess.

Statistically less than half of all short sales get approved the biggest reason being the Seller themselves don't qualify. The other primary reason is there are multiple lien holders on the property and one or more refuse to accept the deal for any number of reasons.

Good Luck, it sounds as if you may be in the 50% category of successful short sales.
1 vote Thank Flag Link Wed Nov 7, 2012
To respond would be pure guess work......we submitted four offers on one "short sale" property before the lender would accept one. AND the fact of the matter was the fourth and final offer was by far the worst of the group.

Only lenders are repared to address their level of motivation which frankly..... often doesn't make good business sense.

Good luck,

1 vote Thank Flag Link Wed Nov 7, 2012
The primary lender cannot yet be paid off because the sale has not closed. Banks receive their final settlement out of closing and it's disclosed on the HUD-1. If the listing agent is competent, you should have an approval from the 2nd, but due to the size and complexity of a short sale, there's no way to weigh variables that affect the results.

As the buyer, it's out of your hands, for the most part. Let it be that way and trust that your agent has conveyed the information that's pertinent to your case to you properly.
1 vote Thank Flag Link Tue Nov 6, 2012
Yes, the second lien holder is getting more than usual.
0 votes Thank Flag Link Wed Nov 7, 2012
Short Sale is a viable option to foreclosure with a high % of success if the buyer has been made aware uo-front that it can be a lengthy process.
0 votes Thank Flag Link Wed Nov 7, 2012
There's honestly no way to know what the actual outcome will be until it's complete. Short sales are typically a long, frustrating process with a variety of outcomes. Stick with it and keep your eyes open for a 'back up plan' if you need it.
0 votes Thank Flag Link Wed Nov 7, 2012
It sounds like you have a very good chance at approval.
0 votes Thank Flag Link Wed Nov 7, 2012
If the second lender rejects the short sale, would they not risk loosing 24 percent of their outstanding loan amount? I guess that should be a big motivation to get the short sale approved. I am also worried that if they come back with a high counter offer then the 6 to 10 percent discount I am getting on the property might be wiped out making the long wait and anxiety associated with short sale not worth it. Do the lender counter at market value or they pass on some discount to the buyer since this is a short sale?
0 votes Thank Flag Link Wed Nov 7, 2012
The second lender is Bank of America and the primary lender has agreed to pass on the remaining amount of the offer price after adjusting for sellers closing costs and commission. Thank you for your responses.
0 votes Thank Flag Link Tue Nov 6, 2012
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