We just found out the short sale we are trying to purchase has two mortgages, what now?

Asked by Alysia Suriel, Palm Bay, FL Sun Aug 12, 2012

We just found out that the short sale we are trying to purchase has two mortgages on it. Does that mean it will take even longer? The owners told us that that they had four other offers on the house that did not work out because the bank wanted more money then the buyers were willing to pay, so they dropped the contracts. Because they have had previous offers, does that mean the negotiating has already been done, and banks have already agreed on a price?

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15
Alysia Suriel, Home Buyer, Palm Bay, FL
Tue Aug 21, 2012
Just wanted to update everyone. We hard back from the bank today, and both banks have accepted our offer, and we will be moving forward with the paperwork! I do realize that this is not normal with short sales, and we are very blessed that the process has moved this far this fast, considering its been less than a month since we submitted our offer. Thanks again everyone!
1 vote
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Sun Aug 12, 2012
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Right on Debra and Tim below!

I'm so sick and tired of dealing with these NIGHTMARES that almost always end up as Dead Deals now days!

Yes, maybe 2 yrs ago they were ok, but not now! Yes, even a blind squirrel can still maybe find a nut, but Short Sales’ time has passed!

As a Florida Mortgage Broker who advertizes all over Florida, I see it all, from all over the state and I can tell you this...These Banks Don't Have To Take It Anymore! And then if there is a 2nd lien, you can hang it up!

Have your realtor find you a Foreclosure or Re-sale where you can get in with MUCH less out of pocket as these deals can be negotiated with seller credit to pay closing costs too!

Short Sale has become a Nasty phrase that I for one will me glad when it's retired for good!
1 vote
Tim Moore, Agent, Kitty Hawk, NC
Sun Aug 12, 2012
Debra hits the nail on the head. Why would people flock to a house where the owner knows they are going to walk away with nothing and so have likely taken no care of it knowing they will get nothing, might take everything including the kitchen sink and knowing they won't be sued since you can't get blood from a turnip. They will make no repairs and it might never close and move right to foreclosure auction in which case the bank gets it after waiting 4-6 months to close. Why? I have no idea other than the perception they are stealing it.
1 vote
Debra (Debbi…, Agent, Livingston, NJ
Sun Aug 12, 2012
I still don't understand why buyers gravitate to a short sale............although I do think there are a lot of misconceptions surrounding them......one of which is that they are all fabulous deals.......

not so

My advice?
just find a house you know you can buy once you and the seller agree on price and terms.........then move on with your life, instead of being put on hold, indefinitely, waiting for a bank to make a decision.

Best wishes
1 vote
Janet Nation,…, Agent, Baldwin, NY
Mon Aug 13, 2012
Alysia, that statement can have two meaning:

(1) The agent/seller spoke with the lender, and the lender gave permission to do a short sale, no price has been discussed or agreed upon or

(2) The agent knows exactly the dollar amount that is acceptable to the bank, and therefore would be looking for that exact offer.

Based on your inquiry, it's clealy the first one, otherwise you wouldn't have a situation where offers are turned away because they are too low. Most short sales are worked under the first scanario.
0 votes
Alysia Suriel, Home Buyer, Palm Bay, FL
Mon Aug 13, 2012
Thank you all for your advice, I forgot to mention the house is listed as a "bank approved short sale."
0 votes
Janet Nation,…, Agent, Baldwin, NY
Mon Aug 13, 2012
The listing agent may have priced the house a little on the low side, some do that thinking that it's a short sale and they can just list the house for whatever they like to attract buyers, I see this all the time. Ask your agent what the bank was looking for (since you said they wanted more money) and then with your agent's assistance see if that falls on or below market value, preferably below because short sales are discounted. If you are not willing or able to put in an offer for that amount, just simply look for another house.
0 votes
Pat Palmer, Agent, Delray Beach, FL
Mon Aug 13, 2012
Hi Annette,

The two best assets you can have are patience and a warped sense of humor. Short sales are time consuming...and that's with one mortgage. When there are two, the time frame goes up exponentially
My assumption is that the banks haven't agreed on anything. If a given offer is declined, the negotiatin between mortgages starts over.

My best advise is to forget about the offer for now. Let the banks sort everything out while you keep looking. And one other bit of advice. Never put your furniture down until your agent hands you the keys. Until that time, it's just someone else's house.

I hope this helps.Feel free to contact me with any other questions.

Pat Palmer-Broker Associate
Boca's Best
Direct: 786-286-6557
Email: patpalmer@kw.com


Keller Williams Boca Raton
2424 N. Federal Hwy. #318
Boca Raton, FL,33431
0 votes
Annette Law…, Agent, Palm Harbor, FL
Mon Aug 13, 2012
Alysia,
Hang in there. With the chronic shortage of suitable homes for sale, many potential home buyers find themselves in your situation... between a rock and a hard place.

All you can do is be patient. As the buyer, you are the least significant participant in the process. As you suspect, there does exist a gigantic pile of obstacles that must be overcome before success is realized. Even if the banks agree, ( they do not negotiate in good faith with the homeowner) to waive the deficit, even if you agree to toss in a $40,000 tip to one of the lien holders, the seller by get fed up with the abuse and move to their plan B, with means No Sale.

With so many home owners a the very edge of selling the home on a break even basis, whether a home is a short sale of not MAY depend on the offer received. If the listed price was the break even point, and you offer 15% below, your offer, in essence, forced the short sale. (15% is the statistical saving of a short sale over a traditional sale, for those 30% that succeed)

There is much we do not know about the sellers situation and your offer. What we all do know and have voiced is when engaging the short sale process, logic, reason and good faith are the first elements to disappear. You will find it repeatedly stated that the ideal short sale buyer is the one who has NO emotional attachment to the home. Regardless of the good intentions of everyone involved, short sales have a very high failure rate. Avoiding the resulting heart break is one goal of those agents representing buyers who are shelter seekers

As professionals who are enmeshed in the process all the time we often forget that "Everyone Does Not Know" what the banks are doing.

Your question> "does that mean the negotiating has already been done, and banks have already agreed on a price?" Some banks WILL resume the process where the last negation ended (should all terms and conditions remain the same) if occurring within a predetermined time frame. Because every short sale situation is different, there exists only an illusion of rules. In some cases if the bank(s) or investors believe the homeowner has cash stashed under the mattress or sock drawer, they will try to get it, even if it originates with the buyer! Anything can happen.

Short Sales, also known as the "Wild, Wild, West of Real Estate" exist in an environment where ANYTHING can and often does happen. What you must avoid is second guessing what the pros are doing. No, you will not be updated regarding every step. No, you will not be advised of every negotiation. All you can do is be patient and ready to respond at a moments notice.

I do wish for you the very best outcome possible.
Annette Lawrence, Broker/Associate
Remax Realtec Group, Palm Harbor, FL
727.420.4041
http://RealEstateMadeEZ.us
0 votes
Debra (Debbi…, Agent, Livingston, NJ
Sun Aug 12, 2012
I can't speak for others, but I think I can say that none of us meant to sound as though we were scolding or chastising you...........just forewarning you that the outlook may be grim that this will result in a closing...especially with 2 lien holders...and we haven't even gotten into how much is owed on the home.

I wish you all the best!
0 votes
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Sun Aug 12, 2012
Regardless of how you are taking good advice, you will benefit from someone telling it like it is, in this market, when so many others are so willing to blow sunsine north.

Move on, buy another home that you will think is an even better deal (every buyer does and are always so happy they found the next home), ask for a 2.75% rate, close and be happy!

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0 votes
Alysia Suriel, Home Buyer, Palm Bay, FL
Sun Aug 12, 2012
We did not gravitate to a short sale. We originally did not want a short sale at all and were avoiding them. We found the house and went for a viewing and fell in love with it, then found out after it was a short sale, it was not listed as such. We decided to take our chances on it. We'd rather wait for a home that we fell in love with then purchase one that we don't love about because of impatience.

The reason there were so many other offers is because the house has been renovated, with a new roof, new A/C unit, upgraded bathrooms kitchen and floors. The owners are elderly, and applied for a short sale because they can no longer put the work into caring for the house, due to health problems. The home was and is very much loved and cared for by the owners, and it shows. Our contract states that they will be leaving all appliances, which have also been upgraded, including all pool equipment. If they come back saying they want to take the appliances, we will be dropping the contract. We also have applied and been approved for down payment assistance for first time home buyers, and they will be covering the closing costs. The house is well worth the price it is listed for, and we offered the listing price for it. We and our Realtor believe we have made a very strong offer,

I don't appreciate posting a question and being scolded for our decision in pursuing a short sale home. My agent has already giving us his opinion on the matter, and I was simply wondering what others thought about the situation. We put our offer in three weeks ago, and last week, we signed a arms length affidavit. I know that does not signify that the process is any closer to being completed with the bank(s), but at least we know they have received the file and are reviewing it. We are in no rush, and if for what ever reason this does not work out, we will move on and find something else. We have not stopped house hunting, and have not put our eggs in on basket over this. I admit, in my zeal I get a little anxious about the process, but that is the way it is when trying to buy any house that you are in love with. Well, at any rate, thanks for the advice.
0 votes
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Sun Aug 12, 2012
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You need to BAIL RIGHT NOW from that........ Clown Car Full of Horrors!!

Short Sales (a.k.a. LONG SALES) are not good deals for buyers, they are only good deals for the sellers who are getting out of paying their contractual obligations by not making their payments and threatening their lender that they'll let walk away from the home.

But if you do weather the next 10 months of horrors, the appraisal will come in less than the sales price anyway!

Move on to a re-sale or foreclosure, a property that you can get a good deal on, and one that will actually close while rates are in the 2% range for qualified borrowers!


Steve McRory

Pro Option Mortgage/Florida

http://www.pro-option.com

steve@pro-option.com

Ph: 888 662 4404

Prior Service U.S. Marine Corps
0 votes
Phil Rotondo, Agent, Melbourne, FL
Sun Aug 12, 2012
It sounds like the bank may have at one time agreed on a price; but if the Broker Price Opinion becomes outdated you may have to start the process from the beginning.
If you are not being represented by a Realtor, please let me know if you need assistance with this. I can find out the current status and proceed accordingly with you.
Phil Rotondo, Realtor
ERA Showcase Properties and Investments
Palm Bay
mailto:phil@321property.com
0 votes
Danielle Sha…, Agent, Cape Coral, FL
Sun Aug 12, 2012
Until you receive a short sale approval letter in writing nothing is certain in a short sale. Having 2 mortgages is not uncommon and while it adds another layer of approval, time and annoyance it's not an insurmountable hurdle. As long as the person negotiating the short sale is any good this shouldn't be a huge deal.

Talk with your agent after they can find out the details on this particular property. There are so many different pieces that go into a short sale that it is very difficult to give a blanket answer.
0 votes
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