Anyone with experience on short sales? (real estate)

posted 2 years ago in Home
Post # 2
Member
371 posts
Helper bee
  • Wedding: May 2015

I bought my house as a short sale. I live in ohio and made a offer in May 2011 and found out at the end of July that it was accepted and closed at the end of August. Im not sure what questions you have but the only bad things with short sale is the wait and that banks can take a long time. I was in a tough situation because there were 2 offers on the table and since house was listed below the comparables I went in at asking price and asked for 3k towards closing. That was still 20k less than the appraisal. definitely don’t base things on pictures and make sure the offer is contingent upon financing, inspection and appraisal. Definitely get the home inspection it’s only a few hundred dollars. You can ask that the sale includes a home warranty. It’s not uncommon to see. I never used my home warranty so not sure if it’s worth it

  • This reply was modified 2 years, 2 months ago by  Sara1923. Reason: Added year
Post # 4
Member
2052 posts
Buzzing bee

We dont own our home, but my friend recently went through this. Basically the term “short sale” is really misleading because it can take a really long time to process. Not to mention short sales are still having to work with their bank, and often times they will price low to get interest, but they wont actually accept their asking price to buy the house. The bank wants to recoup as much of their money as possible. My friend offered almost $20k over asking and their offer still was not accepted.

Basically though short answer is if you’re in a hurry, dont look at short sales.

Post # 6
Member
2052 posts
Buzzing bee

Sporty-Bee:  Are you sure its a good property though? Has a home inspection been done?

Another problem with short sales is often maintenence and repairs havent been done by the home owner because they havent had the money. Or potentially if they had repairs done they could still owe for those repairs, which would become your debt if you buy the house. Thats an extra expense for you on top of the cost of the home

Post # 7
Member
35 posts
Newbee

A short sale isn’t an indication of the length of time the transaction takes.  A short sale means the bank is settling for an amount lower than what is owed to them.

  • This reply was modified 2 years, 2 months ago by  Brookiej.
Post # 8
Member
305 posts
Helper bee
  • Wedding: July 2014

I bought my home as a short sale.  I had actually been renting it for two years prior to finding out that the landlord was heading towards losing the house and she decided to list it as a short sale.  Well, I put in an offer on it in January and didn’t close until June 13.  It look six months.  So if you need to move quickly, I wouldn’t count on it.

 

 

Post # 9
Member
191 posts
Blushing bee
  • Wedding: September 2011

Sporty-Bee:  DH and I bough a short sale.  It took 8 months from the time the initial offer was made until closing and we paid only $2k under asking, but we think we got a great deal and it was worth it for us.  That is our experience, we were on a tight budget, so we were willing to wait to get a great price on a house.  GL!

Post # 10
Member
917 posts
Busy bee
  • Wedding: July 2013

I have experience both from the buyer’s side and the seller’s.

My husband bought our current house (before we were engaged) in October, 2012. Before that, he had put in an offer on a different house that was a short sale. He put the offer in in early April. The bank really drug out that process. It was through Bank of America, and they’ve since been sanctioned for their processes with short sales. It took until about August or September for my husband and the bank to complete the negotiation process and approve the sale. Right when he was expecting to get ready for closing, the bank assigned his account to someone else and started the whole process over again. It had been 6 months already at that point. He was so mad that he found and made an offer on our current house, which wasn’t a short sale.

Now, we are in the process of short selling my old townhouse. We went under contract in early July and are still waiting for approval from the second bank. The first bank approved things in late August, but I have 2 mortgages, and the second bank is taking longer. I’m hoping to be able to close in October, but there are no guarantees at this point.

So, the biggest thing about a short sale is that you are at the mercy of the bank. And some banks are better to work with than others. You have to plan on the whole process taking at least 6 months. If you’re lucky, it might be a little less.

The other thing about a short sale is that because you’re going through the bank, the seller isn’t going to make any repairs. They are sold as-is. So it’s really, really important for you to get an inspection and know what you’re getting into.

Let me know if you have any other questions.

Post # 11
Member
389 posts
Helper bee
  • Wedding: December 2014 - Norton Country Club

FI just had to undergo a short sale (as a seller) to move for work.  The entire process took 8 months, despite being a well-priced property in a desirable area.  It seemed that the realtors showing the place were not up for the amount of work involved in a short sale (the eventual buyer said she had 3 realtors show her the home but only one willing to pursue an offer lower than the initial listing) and the bank was not cooperative at times.  Once we had an offer in, it took 4 months from submission to the bank to approval.  Now, 8 months after the offer, we are still fighting the bank to remove FI’s name from all of the documentation on the home.  I’d recommend having a good realtor- one who is aggressive enough to keep up on calling the bank.  Hope that hleps! 

Post # 12
Member
2642 posts
Sugar bee
  • Wedding: September 2012

Our house was a short sale (in Virginia).  We put an offer in mid-February and close early May.  The big things to take into consideration when dealing with a short sale are:

1. Time.  Since you are dealing with a bank (or two or three) it can take a long time.  Maybe the banks are different where you are, but, from my understanding, the banks don’t pre-approve a sale price.  The owner sets the price, accepts an offer, then submits the offer with a letter stating why they need a short sale.  So the bank not only has to approve the price, but must also give permission for the owner to do a short sale.  There is no pre-approving of anything.  And this happens Every. Single. Time. the owner accepts an offer.  So if the owner had previous offer accepted on the house that fell through, they still have to go through the same short sale application process with the bank for the next offer.  Now this could be different in PR, so I’d just double check that your realtor is correct in stating that they have already been approved to short-sale at that price.  Because the other thing that could happen is the owner lists one price, but the banks will say it’s too low and not accept the offer.  This actually almost happened to us.

Also, if the owner has ever refinanced or taken out a second mortage with a different bank, that other bank will also have to approve the short sale and the offer.  So that is another road block to watch out for.

2. Maintainance.  Usually short sales are in need of work – which makes sense because if the owner can’t pay the mortgage, then they also can’t afford to fix the AC or leaky roof.  So definitely get an inspection (make that a condition for closing) and make sure you have some liquid cash set aside to take care of any reparis.

3. Low chance of getting any concessions.  We were able to get $5K in closing costs from the bank, but I wouldn’t necessariliy count on it.  Or getting any concessions if the home inspection comes up poorly.  The owner doesn’t have any money and I wouldn’t expect the bank to give you money to fix a broken pipe or pay for a new water heater.

4. Super fast closing.  I’m not sure how often this happens in normal sales, but once the bank accepted our offer, they told us we only had 2 weeks to close.  The problem?  Most banks and credit unions require 4 weeks to get your loan approved and paperwork complete.  We had to go with a private mortgage compnay for our mortgage instead of my preferred credit union.  We also only had 2 weeks to update insurance, get our home inspection, and the other misc. paper work.  It’s obviously doable, but just something to be aware of.

 

Post # 15
Member
418 posts
Helper bee
  • Wedding: July 2015

I bought a short sale condo.  There was nothing wrong with the unit itself, but it took forever for the paperwork to go through.  I put my offer in during the month of August and we didn’t close until January.  My realtor and I did all of our paperwork on time, the seller did everything she needed to do, but the bank took forever.  Granted this was in 2008/9 when there were a lot of short sales/foreclosures. 

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