Post # 1
- Wedding: October 2011 - Bed & Breakfast
Mr. Lk and I found a house 3 weeks ago and nothing else has come close to it. We’ve now seen at least 30 properties, and this one is head and shoulders above the rest. It has the potential to be the shining jewel that it once was in a neighborhood filled with high end homes. But it’s a short sale with 2 mortgages (BoA and M&T) and the house needs some TLC. We’ve decided to go for it, and are putting in the offer tomorrow morning. It’s a complicated sale with family dramaz, terminal illness, a power of attorney, and lots of sadness. I wish I could hug the seller and tell him that we will love this house the same way he did when he fashioned the inlaid floors with his own hands. We’re cautiously optimistic that everything will work out for us with this house because it hits on every point.
I would love to hear from other buyers who have been through the short sale process. How did you stand the waiting? How were negotiations with the bank? Is there anything that you would do differently or anything that you wish you had known ahead of time? Tips or tricks?
Note: We have a fantastic realtor who has spent a lot of time discussing the ins and outs of short sales with us, so we’ve already received professional advice. I’d just love to hear how people actually survive the process with their sanity intact. 🙂
Post # 3
My husband and I just moved into our short sale. We put in our offer late October… went back and forth with the bank… and we closed on Jan. 6th. How did we handle the wait?? well, we looked at a few more houses (in case something fell through with that one)…. and packed boxes! Not being able to speed up the process is annoying!
There weren’t really negotiations – the house was priced very well (about $15K under our budget), so we went in a little under that price to compensate for a roof that we would have to put on.
It sounds like the house that you are interested in will be very complicated! Good luck!!
Post # 4
@lovekiss: I don’t have anything to add other than Darling Husband and I just put in a full price offer for a short sale this afternoon. The property was listed comfortably below our house budget and below market value so…I’m a huge ball of anxious anxiety right now. Good luck!
Post # 5
I used to work at a RE law firm…the thing about short sales versus a foreclosure is that you need to negotiate both with the home-owner AND the bank, versus just working with the bank.
The properties tend to be better maintained versus foreclosures, but, they can take a loooonnngggg time to close…like, months, and even then can fall through. If you have the time to spare then I say go for it!
Post # 6
My advice is to go into the process expecting it to take a LONG time. Like 6 months or more, especially since it’s so complicated on the sellers side. And then, if it happens sooner, it’s just a big happy surprise. And also, be prepared for the bank to counter back at or over list price. The relators don’t have to clear the list price with the bank, and the bank will calculate what they ‘need’ to net from the short sale, which is usually a pretty firm number.
We put our offer in mid-March and closed in early December….so almost 9 months. Ours should have been straightforward, with a single mortgage and an owner still keeping up with payments and living in the home. But it got processed incorrectly on the sellers side, someone missed the FHA clause on original loan, so it had to be completely re-processed.
I think a lot of our issues were due to the sellers relator not doing her job and following up in a reasonable timeline, etc. So I’d encourage your agent to be on top of things with the sellers agent, and if possible get the phone/email of the main contact at the sellers primary bank. Once our relator got that info, things changed for the better.
As far as passing the time? We looked at other properties as contingency plans. Planned any renovations to the new house and yard – researching costs, vendors, etc. Found a good home inspector. I also highly recommend is getting all your paperwork perfectly in line with your own mortgage bank, that way as soon as the sellers bank gives you the go-ahead, you can push the button on your appraisal and bank processing and get into that house asap 🙂
Sorry for the novel – good luck!
Post # 7
I have friends that bought a short sale, and it was a long and hard process. They had several properties fall through before they got their current home.
I think what would make me hesitate most about the property you want is the fact that it has 2 different banks to deal with. That means they BOTH have to agree on the sale price which could take forever…if it even happens.
Don’t expect to be able to negotiate much with the banks, and expect the selling price to possibly be over list. Often, they will sell as-is, as well – be prepared for that.
Be prepared to have a flexible lease situation in case the short sale takes longer or shorter than expected – a month to month or 3-month lease with renewal is optimal.
Post # 8
- Wedding: October 2011 - Bed & Breakfast
Well, we did the offer paperwork this morning. And the waiting begins! We looked at the land records, and the purchase price would fully pay off the first mortgage with money left over for the second mortgage. If the house goes into foreclosure, the second mortgage holder would get absolutely nothing, so they should be motivated to negotiate with us so that they at least get something from the deal. Knowing this, we’re feeling more comfortable with the deal. Our REA has been in constant contact with their REA from the time that we viewed the house until now. Their REA specializes in distressed properties and really knows her stuff. Hopefully she will do her job well and the process will go smoothly. We have our fingers crossed!
Post # 9
@lovekiss: I’m a lurker (and waiting) and being you are in MD like myself felt compelled to respond. I am no realtor but it all depends on market and how persistant your realtor is. I purchased in Montgomery County, MD and after looking at about 80 short sales finally found one about 25K out of my range that I adored. This was 3 years ago. Everyone and their mother tried to discourage me, I went thru 3 realtors before I found one who would even agree to show me short sale properties. After I put a lowball offer (30k under) on my now home, everyone including my realtor thought I was nuts and told me to brace myself to be laughed at. Well the bank (Bank of America) came back with a counter only $5k above my offer and it went into contract. From acceptance to close it was 6 weeks TOTAL. Put in offer mid-June, took a week for bank to get back to me before I accepted, and I closed August 14th cause I had to wait til a Friday to get off work early. It also helped that the sellers were very motivated. So motivated they gave $4k in closing assistance and agreed to have a brand new HVAC installed since the home had original 1970s central air in there which didnt work well. I attribute these things and the speed with the way my realtor really went to bat for me with the banks. Maybe he felt sorry for me being a single mum at the time? The day after I closed there were forclosure docs on the door when I got home from work address to the previous owners (which my realtor took care of). My short sale wasnt in such bad shape, just had alot of original appliances, carpet, fictures, which I saved my pennies and replaced one by one. I just finished having the kitchen fully remodeled last summer and with all my polishing here and there everyone who comes in adores this house. Please feel free to reach out to me if you have any questions since your in my local area.
Post # 10
Late to the game, but curious where you are in the process?
I found my home, offered a week later, and closed 3 1/2 months after the offer date. (took 2 months to get 1st bank acceptance, 2 2/3 months to get 2nd bank.)
We offered 7% below asking price. It was a risk, but, worth it. 🙂
Bank also paid 3.5% closing costs. I paid the extra.
I have been in my home for 6 mo and SUPER glad we weathered the shortsale drama. Whew. It WAS DRAMA.
Home was listed for foreclosure action on the SAME DAY that we closed. YIKES.
Post # 11
- Wedding: October 2011 - Bed & Breakfast
Wow… I forgot about this thread. That short sale fell through because the owners never got their act together to submit the necessary paperwork to the bank, and the short sale after it fell through when the seller’s bank demanded $50k more than we were willing to pay. But it worked out for the best. We closed on our forever home yesterday and couldn’t be happier. All of the heartache and anguish was worth it. 🙂
Post # 12
lovekiss thanks for the update and so glad it worked out in the end for you!