Short Sale means for example: someone bought a house in 2007 and got a $500K loan on it. Now they want to sell the house (usually due to financial hardship such as loss of job, …). Naturally the prices have crashed since then and they will be lucky if they can get let’s say $300K for it. If they sell the house for $300K they will be short $200K to be able to pay off their loan. In most cases people do not have the cash money to cover the shortage so what they do is a "Short Sale". Here is how it works: the seller markets the property for $300K and finds a buyer for it. Then they take the offer to the seller's bank along with the seller's financial information and ask their bank to accept the offer and let them off the hook. If the bank goes along with the offer the property will get sold at $300K and the bank usually will be the one loosing $200K. The biggest drawbacks of short sales are:
1) The length of time: It usually takes between 3 to 4 months (in some cases even longer) before the Seller's bank gives you a "Yes" or "No" answer or even a counter offer.
2) The uncertainty: There is no guarantee if the seller's bank ultimately will agree with the sale or not. So you might wait that long and end up with nothing at the end. When dealing with a short sale you should remember the asking price of a short sale is just a number that the seller and his/her Realtor have picked (usually according to recent sales activities in the area) and does not necessarily mean that the seller's bank will accept it.
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Yes Michael is right on point with his answer. Here in Seminole County it seems to take awhile for the tax records to be updated on foreclosures. If your interested in finding out if a home has been foreclosed I would check the public records or contact an agent here in the area.... more
FORECLOSURE REALITY CHECK.... Seasoned investors who buy foreclosures know the REO manager at the bank and get "off market" deals. They never have to bid or find a place to learn what's available.
FOR ALL OTHERS: The only "sellers market" in america is the foreclosure market. Don't expect any deals from a foreclosure as the bidding process brings 20-30 people to bid on almost every deal. A deal that was already priced at market. For government foreclosed homes, by law, they have to be priced "at market".
The REO manager has a short list of "cash/close in 2 day buyers", they always get the first right to bid. Then they have to wait for the "public auction" Which drives up those prices. After a 30-60 day period. Then the REO picks the best bid. Sometimes, only sometimes does a REO manager take a property directly to a buyer he knows peronsally. Why should he, he has a bunch of people bidding and driving up the prices.
My REO manager friend likes to joke about all the "first timers" who continue to drive up the bid when they don't hear anything from the bank. Every time I see the "how come I haven't heard from the bank about accepting my foreclosure bid after 30+ days" on trulia, I have to let out a chuckle because he's so right. For those newbies, this is real. They know that when you don't hear from them that a large percentage of people drop a second or third offer higher than the previous one. **WARNING, YOU ARE BEING TAKEN ADVANTAGE OF HERE**
You want a deal on a property right, everyone wants that.... So the moral of this story is:
1. the 60 days you have to wait to hear from a REO, you could have made 2 or 3 better deals with a property that has been on the market for a long period of time. Any realtor can help you drop a crazy offer.
2. You are attempting to make a deal in a house covered in a cloud of bad energy, don't be surprised when it rubs off. Personally I stay away from these for this reason entirely.
3. One way to get a deal is dropping a hand written note on ANY house in a neighborhood you want to buy that says "my girlfriend and I want to buy a house in this neighborhood and yours looks cute from the outside. Do you know anyone that is looking to sell?" I always get responses, better prices and positive energy into the home.... more