O/T Tell me what you know about SHORT SALES

[ekatiel]

OK guys, this is totally off topic, but we've kind of been thrown for a loop in our home buying process. We made an offer on a house this past week. Our offer was accepted, but it turns out now that it's going to be a short sale (the homeowner didn't even tell HIS agent about the short sale, so no one but the homeowner knew that he was upside down on his loan ).

The home is being sold b/c of a nasty divorce. It needs a little cleaning and a little work, but it is in a GREAT area at a GREAT price (which is why we jumped on it). So, what do you guys know about short sales? How much time is this whole process going to take?? We COULD buy something else in the area, but it will cost us at least $25K more for something just as decent. We can afford to pay more, but I'm a sucker for deal . We have the ability to live at my mom's house for a few weeks after our house sells (which is in the same town that we are moving to), since it seems like it's going to take longer for this house to close.

We move out of our house on May 13th. Our bank, USAA, told me on Friday that the soonest closing date they have for a short sale is May 24th. HOWEVER, to lock in a date with them, we have to give them $300, which could be non-transferrable if we get deep enough into the process. We are sumbiting the contract to the seller's bank early this week for approval, so I don't want to lock in with USAA before I know if the seller's bank will approve the sale.

Anyhow, I'm just looking for knowledge/experience with short sales. How long does it usually take the seller's bank to approve the sale? (The seller's bank is Wells Fargo, if anyone has direct experience with them). This whole situation is making me nervous. We really like the house, we LOVE the neighborhood, and we've got a little bit of time to sit and wait, but I don't want to wait around forever for a deal that's not going to happen. Any input is appreciated ! --Katie

 

[lorisnuts]

Short sales are not easy to deal with. They don't always go smoothly. We purchased our home current home on a short sale. It took 6 months from start to finish to complete the sale. It took 2 months for their bank to approve the purchase price. the purchase did take longer because the couple was divorcing and paperwork had to be shuttled between 3 different states.

good luck.

 

[mickeytattoo95]

We bought a short sale house and would do it again! Like you, we got a nice deal in a great neighborhood. I don't think we could have gotten into this neighborhood without the short sale. We got it for almost $50k less than what it had been listed as with the realtor. A realtor still did the negotiation, but they were required to take every offer to the bank (Chase) and ours got approved!

The process of closing did take a little longer, but I was surprised that our offer placed on 12/31 actually closed on 2/28 so that was only two months! We did not have to pay any "lock-in" fee that your bank seems to be charging. I wouldn't do that just in case things fall through. If you put earnest money down and things fall through with the short sale, you can still get it back. If you give money to your lender, you may not. If they make you pay that, tell them you'll just have to find another lender.

Our closing was really uncomfortable because it was a divorced couple. We were happy to be getting a good deal, but they seemed really sad. I felt bad, almost like I was stealing their house.

Anyhow, the house needed a lot of TLC. You could see a lot of visible damage from fights...holes in the wall, etc. We also had to buy the house "as is" so any problems that you normally ask to be fixed after an inspection, were completely our responsibility. We wrote into the contract that if the inspection revealed any problems we could still get our money back and get out of the purchase though. I have to say that we had a really good realtor who knew how to do short sales.

We've been in the house for two years now and are really glad we bought a short sale! Go for it!

 

[ekatiel]

Short sales are not easy to deal with. They don't always go smoothly. We purchased our home current home on a short sale. It took 6 months from start to finish to complete the sale. It took 2 months for their bank to approve the purchase price. the purchase did take longer because the couple was divorcing and paperwork had to be shuttled between 3 different states.

good luck.

6 months is not what I wanted to hear!! We would defnitely have to back out if it were to take that long. I am worried about the whole paperwork thing-- the "wife" of the couple now lives out of state. It took them 4 days just to sign our contract . Thanks for letting me know about your experience, even if it's not what I wanted to hear. What bank was the seller's mortgage with (please please please don't say Wells Fargo!!)? --Katie

 

[LuluLovesDisney]

I am in the process of buying a short sale right now. Basically everything that the seller normally approves needs to be approved by both the seller and the lender. Many times short sales are sold as is which means get a FULL home inspection and make sure you are under no obligation to buy if something is discovered during the inspection. (obv we know it needs TLC but like a PP said if there's asbestos or termites or a huge leak and black mold you don't want to go near that!) I think with the market not able to handle a huge foreclosure crisis we are going to see more and more short sales! Ask if the seller's bank/lender has preapproved the list price. That makes a huge difference too. For me it is a little different since the seller's lender isn't a bank but a private lender.

 

[ekatiel]

We bought a short sale house and would do it again! Like you, we got a nice deal in a great neighborhood. I don't think we could have gotten into this neighborhood without the short sale. We got it for almost $50k less than what it had been listed as with the realtor. A realtor still did the negotiation, but they were required to take every offer to the bank (Chase) and ours got approved!

The process of closing did take a little longer, but I was surprised that our offer placed on 12/31 actually closed on 2/28 so that was only two months! We did not have to pay any "lock-in" fee that your bank seems to be charging. I wouldn't do that just in case things fall through. If you put earnest money down and things fall through with the short sale, you can still get it back. If you give money to your lender, you may not. If they make you pay that, tell them you'll just have to find another lender.

Our closing was really uncomfortable because it was a divorced couple. We were happy to be getting a good deal, but they seemed really sad. I felt bad, almost like I was stealing their house.

Anyhow, the house needed a lot of TLC. You could see a lot of visible damage from fights...holes in the wall, etc. We also had to buy the house "as is" so any problems that you normally ask to be fixed after an inspection, were completely our responsibility. We wrote into the contract that if the inspection revealed any problems we could still get our money back and get out of the purchase though. I have to say that we had a really good realtor who knew how to do short sales.

We've been in the house for two years now and are really glad we bought a short sale! Go for it!

Two months sounds do-able for us! I'm not sure what to think about USAA charging all these fees. There is another lender that we have also made contact with, but we know that USAA will do a good/quick job with our VA loan, so we were hoping to go with them. It sounds like Chase did a good/quick job approving the short sale. Anyone have info on Wells Fargo? --Katie

 

[mickeytattoo95]

I really don't see why Wells Fargo would want to drag their feet in the deal. They want to recover their money ASAP. I believe they'll work as quickly as possible to get the home owners approved for an unsecured loan to cover the difference of what you're offering and what is owed on their mortgage. They are a HUGE company, not some small local bank.

 

[lorisnuts]

6 months is not what I wanted to hear!! We would defnitely have to back out if it were to take that long. I am worried about the whole paperwork thing-- the "wife" of the couple now lives out of state. It took them 4 days just to sign our contract . Thanks for letting me know about your experience, even if it's not what I wanted to hear. What bank was the seller's mortgage with (please please please don't say Wells Fargo!!)? --Katie

it was in a government HFA program. Anything else they said couldn't be disclosed to us. The husband had the paperwork in Kentucky for over 2 weeks. He lived in a "holler" and had no phone. We got in touch with him by sending him flowers and thanking him in advance for his prompt return of his paperwork. The paperwork was in the mail the day after he recived the flowers. When it was returned it had to be sent to another state for the wifes signature. We went thru the same thing. More sitting and waiting.

Our house was also sold in "as-is" condition. It had holes in the doors and walls. We heard from the neighbors their were lots of fights where the police were called.

I think we probably would do it again for the right house. It is in one of the best neighborhoods in town. the day we closed the realtor asked us if we wanted to sell it. she said she could easily sell it for $50,000 more than what we paid.

 

[livndisney]

Two months sounds do-able for us! I'm not sure what to think about USAA charging all these fees. There is another lender that we have also made contact with, but we know that USAA will do a good/quick job with our VA loan, so we were hoping to go with them. It sounds like Chase did a good/quick job approving the short sale. Anyone have info on Wells Fargo? --Katie

2 months may depend on where you are. We are almost 2 months into a short sale and no one can even tell us if the bank has looked at the offer. The realtor told us she has deals that are 8 months out and still have not closed. At the rate this is moving the bank will foreclose on the property before they look at the offer. We love the house, but if I had it to do again I am not sure I would. You can wait months and still be no closer to buying a home.

Good luck, I hope it works out for you.

 

[katied]

If the seller hasn't disclosed the short sale position to anyone, expect to be in for a long wait. We had this happen to us, and ended up backing out of the deal after 6 months of waiting.

For the bank to consider, the seller has to go thru a process with the bank - disclose all of their financial records, etc. They need to prove they have no other assets to settle their liability with (the may depend on the state - in some states, the banks can't go after other assets for home mortgages, but in most states they can).

So - even if the seller is upside down, if they have assets and the ability to pay their mortgage, the bank is not really interested in letting them out of the mortgage just because.

Also, it can complicate things if there is a first and second mortgage - because generally the second mortgage holder getting nothing out of it, so really has no incentive at all to move things along.

Anyway, it's a good idea to have a back up plan if you're looking at a short sale. They can give you great deals, but there is certainly a cost.

We ended up buying a foreclosure instead - still a great deal - but we were able to close in 28 days.

 

[TessRC]

We are in the process of closing on a short sale, we made the offer in September and just got an accepted offer from the bank 2 weeks ago. It is not a quick or easy process, but if you have the time it can be worth it.

 

[LuluLovesDisney]

I think it all depends what bank the seller is using. For me, since it was a private lender, my offer was accepted within a week. I just wanted to also mention to you that you should be aware that in many short sales, the buyer pays closing costs. Often the seller will pay those but in a short sale, the seller doesn't have the money so that is often not a possibility.

 

[mrsheppo]

We bid on a short sale last year. The seller immediately accepted our offer within 24 hours, however 3 months later we still had not heard anything back from the bank. We ended up finding a HUD home which was larger and in great condition for $5K more than the short sale. We closed on that house in 2 months. The short sale went back on the market in August and as of now is still showing pending on the MLS website.

While there are a lot of great homes listed as short sales, I still see some of the ones we looked at last May still listed as pending. Bank owned in our area are going fast.

 

[Princess Tink]

We too bought a short sale... I agree with others, it has a lot to do with the bank you are dealing with. I can tell you from experience, it also has some to do with how well versed your RE Agent is in the process. We weren't aware of the 'short sale' until we arrived at the house for a showing, and that's when we were informed that it was a short sale. We had a great RE Agent, that was on the RE Board and she was familiar with the process and was able to guide us as well as the selling agent. We also consider ourselves lucky, as the sellers were very nice helpful people... they had to sell due to a relocation, and was put in a bind. They pushed their bank, and were more than cooperative. I am very thankful for everyone involved in the process... because of them, I bought a house for 35-45,000 below original list price (I dont remember the exact amount), and we closed 3 weeks and 3 days after we had signed contracts. Thank goodness, cuz we had a buyer on our house, and we didnt want to be homeless. Unfortunately you have to be patient with this, and really work with the the selling agent/sellers. Good luck, I hope everything works out for you!

 

[BellePrincessBelle]

Short sale on my street was pending for 14 months before it closed. I give these people credit for hanging on that long because it wasn't even a good deal & 4 months later they still can't move in because of the condition.

 

[usnuzuloose]

We sold our home in a short sale in o6. From start to finish it took 3 months. There were two offers and the fight was on. The first couple started buying
furniture before she knew if she got it. Then a man came and offered more than what the bank said it was worth. We were in the process of closing and still did not here from the bank. We started emailing and they replied two days later and said ok. The first couple were really angry. But it took only 3 months. So I hope all goes well for you. Jo

 

[Minnie116]

We just bought a short sale. We were shown the house on March 12 and closed on March 31...So 2 1/2 weeks from the 1st showing to closing. The seller and the bank were very good and quick. But as you can see from all of the posts, the timing can vary greatly.

 

[Kriii]

We bought our home as a short sale and frankly, I would not do this again. It took 17 weeks from beginning to end. If you have time on your hands and are willing to take a gamble that the sale won't work out, by all means go for it though. It concerns me that you said "no one knows" this is a short sale but the owners. The bank usually approves offering the home for a short sale first. Even if you offered the list price, there is no reason the bank won't come back with a counteroffer, assuming they do approve a short sale. This is what happened to us and the realtor basically gave up his commision to cover the difference because we were set to walk away from the deal. If you love the home you might as well go for it, but definately have a back up plan.

 

[Mom2Ben02]

Are you eligible for the $6500 tax credit? If so, you may very well not get it due to not closing in time. Take that into account when pricing out other homes in the area.

 

[ekatiel]

Are you eligible for the $6500 tax credit? If so, you may very well not get it due to not closing in time. Take that into account when pricing out other homes in the area.

Not eligible for the credit-- we moved into our current home on June 27th, 2005. For us to get the credit, our current buyers would have to want to close on June 28th, 2010, and then we would have to close on June 29th, 2010, since the deal ends on June 30th. Obama was NOT thinking about us with the tax credit .

I am going out and looking at other houses with our agent tomorrow. Unfortunately, most everything decent in our price range has been snapped up recently, so the pickin's are slim (we are moving to the best school district in the area, so things tend to be priced higher than other areas and go fast). If we do not find anything we absolutely love, we will not make an offer. We are keeping the short sale on the back burner for now. If the couple wants to get their act together and get the paperwork done, then that's great, but we're not holding our breath. If something better comes along, we will make an offer. --Katie