what is a shot sale?

Asked by dustcloud14, Las Cruces, NM Thu Jul 12, 2012

can we offwr lass that are asking

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Lyn Haston, Agent, Las Cruces, NM
Sun Jul 15, 2012
You can offer less than asking price. Keep in mind that short sales usually have more than one offer and you should evaluate the value of the property and how much you are capable of paying. If there are several offers, often the Bank will come back to all parties and ask for a highest and best offer. Remember the best offer may not simply be the highest. It depends upon many factors including whether it is cash or a loan, pre-qualification or not, length of time to close, and many others.
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Anna M Brocco, Agent, Williston Park, NY
Thu Jul 12, 2012
A short sale occurs when an owner has proven hardship to the lender and can sell for less than owed on his/her mortgage; the owner can accept whatever offer he/she wishes, but the lender decides to accept, reject or counteroffer; short sales are by no means fast sales, much will depend on the number of liens involved, who is negotiating the sale on behalf of the owner, etc., therefore, oftentimes much patience is needed. As for an offer--in order to determine a fair one review comps with your agent, recently sold similar properties in the immediate area, see what the data suggests and go from there. Keep in mind that if a property is priced on target, or slightly below multiple offers may occur.
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Gary Bell, Agent, Las Cruces, NM
Thu Jul 12, 2012

I am a Realtor here in Las Cruces, NM. I can help you if you are looking to make an offer on a short sale. You can offer less, but that doesn't mean that seller's lender will accept their offer. You are able to negotiate just like on any other transaction. Please call me at 575-644-8461 if you have any other questions. I would be glad to help.

Thank you,

Gary Bell
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David Staffo…, Agent, Albuquerque, NM
Thu Jul 12, 2012
Both answers below are accurate, so if you consider buying a short sale property, here is the process, along with some tips:

Banks typically require licensed agents to be involved with short sales, and they pay the commissions, so you should find an agent to represent your best interests (no cost to you, of course). Have them show you some homes and then write offers on the ones you like enough. Once a seller agrees and signs your offer, they will forward to their bank, along with the required short sale documentation (aka short sale package). The bank will then assign the file to a negotiator, who will commission a valuation of the property, usually a broker price opinion, which is an opinion from a local real estate broker, which can make or break the deal. There are tips to making sure this goes well, which your agent should know, or I can share with you if you contact me directly via phone, text, email, or through my Trulia contact page (see my bio). Once the bank receives the valuation, this number becomes very important and determines how much the bank will accept (based on return to their investor). You see, they have historical data on the cost of foreclosure and essentially, they will likely approve a short sale offer that will net them more than foreclosure will. This number is typically what will NET them about 80-90% of the valuation (which they consider current market value), depending on the bank. So, you can see why the valuation means so much! Now, some banks (and most credit unions) require the borrower to sign a note for any deficiency, if state law does not prohibit it. One thing is certain, and that is that things are always changing in this game. Some of the large banks are actually experimenting with compensating borrowers for completing short sales. And, if the loan was backed by Frannie or Freddie, they bank is required to respond to an offer within 60 days, and update all parties weekly if they don’t answer within 30 days.

But back to the process. While waiting for the valuation, the bank will also be reviewing the documents from the seller to determine if they have an actual hardship and truly can not afford the property. Banks used to require a legitimate hardship in order to approve a short sale, but again, change happens, so some banks do not seem as concerned about that part anymore. Once they have reviewed the seller’s situation and they have the valuation, the bank will make a decision… hopefully. You see, sometimes banks never give an answer back, so the listing agent needs to stay on top of them, and the buyer’s agent needs to make sure that happens. As you have likely heard before, this can take anywhere from 2 to 10 months. And sometimes, even though you offered the full list price, the bank comes back 4 months later to say they want $10K more! This is because most banks will not give any indication to the seller or their agent what they will approve, so the seller lists the house at a price they think might garner an offer. However, more change… some banks are beginning to approve a price before an offer is submitted, so you might shop for “preapproved short sales”. Now, smaller regional banks are often much more responsive than the larger nationals, so you might ask about that when you are considering a house. Also, if there is more than one lien, with different lienholders, release of all the liens will have to be negotiated, which can add more time, of course. As you can see, there are many variables to this complex transaction, but a good agent can help you navigate to success. However, short sales are not proving to be the best bargains right now. If you think about what I said above, the banks usually need to net between 80-90% of current market value. Net means after all costs, which includes 6% for the agents and other closing costs which can add another 2-3%, so the acceptable purchase price is really about 88-99% of market value, which frankly, isn’t the greatest deal, especially considering the hassle!

The latest data seems to indicate that REOs (bank owned properties) are selling at the largest discount, so you might consider foreclosures… especially since the bank lists the price they want and they will answer your offer within a day or two! If you do pursue short sales, make sure your agent writes your offers so that you can continue to shop for other homes. You can not afford to wait 6 months for a rejection before looking for another home! Make sure to keep this in mind while you are shopping.

Happy house hunting!
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Shanna Rogers, Agent, Murrieta, CA
Thu Jul 12, 2012
Hi dustcloud14,

A short sale is when the property is sold for less than what the current owner owes their lender(s) - the lender(s) agrees to take a loss on the property. First the homeowner has to accept your offer and then their lender(s) has to accept it too. Short sales can take time for approval/acceptance by all parties so patience is required. And, the lender(s) do not have to approve/agree to the short sale even if the homeowner does.

The best way to know what to offer is to have your Realtor do a Comparative Market Analysis (CMA) on the property using SOLD comps within a 1 mile radius of the property (the closer, the better) that have SOLD within the last 3 months. This will give you current market value and this is what you should base your offer on, not on list price.

Shanna Rogers
SR Realty
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Leigh-Jo Anz…, Agent, Albuquerque, NM
Thu Jul 12, 2012
A short sale occurs when the lien holder, often a mortgage lender, settles on a loan for "short" than the balance owed. For more information on short sales, go to http://www.syan.com/shortsales

Yes, you can ask for less than the asking price, but if the short sale is approved at the list price, the bank may not accept. Before considering coming off the price, keep in mind matters such as closing costs, etc. when submitting an offer.

Syan Real Estate
Call/Text: (505) 730-8181
Web Reference:  http://www.Syan.com
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