Any realtors out here? Short Sale Question

[happily single]

I recently put an offer in on a home that is in short-sale status. The realtor told me that it hasn't gone to foreclosure, but if it doesn't sell soon it will.

THe home needs a new heating system and chimmney. A prospective buyer sought estimates for these and the realtor verbally gave me the amounts ($9,500). I don't remember why or what happened with the purchase, but it never made it to acceptance of the offer by the bank or buyer.

I offered $15,000 less than asking with a provision that the bank make the necessary repairs. The realtor didn't seem to think that she would hear back from the bank for at least 4 weeks, nevermind the holiday

So honestly, what are my chances with a short sale of the bank agreeing to make the repairs and accepting $15k less than asking? The home has been on the market for a while and is currently vacant.

Also, this is not through "MY" realtor, but the listing agent. I do not have a realtor involved. My thinking being it is one less person to split the commission and therefore making it more attractive to all involved.

 

[msmayor]

I think your chances are somewhere between "slim" and "none".

You're basically asking them to cut the price by $24,500...offering $15,000 less than asking AND making the repairs.

The bank is already losing money on a short sale. I don't think they're going to want to lose much more.

 

[DianeV]

That really depends actually. Maybe the price the bank would get with this deal is still better than if it went into foreclosure (not to mention all the costs)

 

[happily single]

That really depends actually. Maybe the price the bank would get with this deal is still better than if it went into foreclosure (not to mention all the costs)

That's what I was hoping. I'm curious to know if the bank will negioate the price/repairs in a short sale. I would hate for them to take 4 weeks and come back to say "take a hike", then I'm out all that time.

 

[abdmom]

Also, this is not through "MY" realtor, but the listing agent. I do not have a realtor involved. My thinking being it is one less person to split the commission and therefore making it more attractive to all involved.

Your reasoning is faulty. The commission is the commission. If you use the listing agent as "your" Realtor, then the listing agent gets the full commission and doesn't have to split it. There is no advantage to the seller or to the bank.

Also, if the seller is selling as a short sale, there is no money to make repairs. Banks don't pony up for repairs.

I agree with msmayor, your chances are slim to none.

 

[Molly Meow]

Not to be negative, but in my experience if they don't like your offer, you won't hear back.

Starting in October of 2009, we put offers in on about 15 short sales. We heard back from one.

We ended up buying a foreclosure. Our realtor (one of my best friends) told us that with both short sales and foreclosures, there is no money for repairs. With the one we bought, we ended up getting in a bidding war and won. The inspector found some issues and the bank, without asking, gave us $3,020 as a credit toward closing costs. That in no way covered our expenses to make it habitable.

Just wanted to share my experience. Good luck!

 

[Sanchez]

I do not know how anyone here can handicap your chances of success (me included.) There are many variables including the lender, the percentage of loss the lender will take, foreclosure status, listing history, current market value, and solvency of the owner. Another factor to consider is whether there is more than one mortgage.

The one certainty is that lenders are overwhelmed and common sense rarely, if ever, is part of the decision. I have seen short sales accepted where the lender takes a a 60% cut. I have seen short sale offers declined where the lender would lose 10%. Best to make an offer you are comfortable with and wait.

A few things:

Four weeks is optimistic. Lenders like Bank of America (and their Equator system) and Wells Fargo are unlikley to do better than 60 days. Some local lenders may do better.

Lenders look at the bottom line. If $10,000 needs to be taken out at closing for repairs it is still possible that the lender will accept. Other costs at closing could be attorney fees, commissions, taxes (usually those about to go into foreclosure are delinquent) and HOA dues.

If a second mortgage that lender will likely be forced to accept zero. That can reduce your chances but it will certainly make the process longer.

An acceptance by the lender does not always mean that you will close. Many times the acceptances have conditions that the seller cannot or will not agree to. For example, the lender could require that the seller bring cash to closing or execute a note for all or a portion of the balance.

Beware of what real estate agents tell you. Many have no idea as to how to handle short sales. They have little or no ability to communciate with the lender.

Be prepared to wait. I would not spend a significant sum on inspections until you have a better idea of what might happen. This is a frustrating process for buyer and seller. Ultimately, you are choosing to purchase a distress property and this is the price to pay for getting good value.

 

[usnuzuloose]

Well I can tell you we sold our home as short sale. This was in 08 it went on the market in june and it was sold in sept. We had two people bidding for it. The did not need huge repairs. It was little things. It was just move in ready. How ever the first person really wanted it and put the offer to the bank and we had no say so as it was upside down. Then during that time a second person made an offer to the bank.

The second offer was twenty thousand more than the first. We went all the way to where the person was getting ready to sign the closing and we still had not heard from the bank. But we emailed them and two days later they accepted the offer. The banks will take the most they can get without putting out money. I dont know what will happen but I hope it works out for the best. Jo

 

[phragmipedium]

Banks don't pony up for repairs.

I thought this as well, but it's not necessarily always true. We bought a foreclosure two years ago and it needed some fairly minor repairs to pass a pest/dry rot inspection necessary for our financing approval. Our realtor and lender both told us no big deal - we should just make the repairs ourselves and then our financing would go through. We were unwilling to make repairs to something not yet ours, so we got a few bids and had our realtor make our offer requesting that the owner (then Countrywide) make the repairs. Our offer was also 10% less than the asking price and requested 3% toward closing costs. After several counters we settled on a price 5% less than asking, but they never countered or had any problem at all providing for the repairs or the closing costs - they accepted that part of the offer from the beginning.

It could certainly be different with a short sale, and depends a lot on circumstances I'm sure - how much the bank has to eat, how long it's been on the market, who the lender/owner is etc. At a certain point they're happier to be getting money for it than holding onto it. It can't hurt to have made the offer and you can always negotiate.

 

[barkley]

i think 4 weeks is very optimistic on the realtor's part. a friend recently closed on a short sale and it took 4 MONTHS for the bank to respond.

 

[Nennie]

I just closed on a short sale 3 weeks ago.

I will tell you it was a lengthy process, but worth it in the end! We made the offer in February, and the bank didn't respond until June. We closed 2 weeks after the bank accepted.

Some things that helped:

1) The Seller had an attorney negotiate the short sale with the bank. Even with the attorney involved, it still took forever for the bank to say anything other than "the file is pending review," but I think it really helped to have the attorney working hard for the seller.

2) We went through the listing agent. I know a PP said that this is of no advantage, but in our case I think it really helped. First it kept everyone in the loop as to what was happening b/c she didn't have to play whisper down the lane (seller calls her agent, agent calls our agent, agent calls us, etc). Secondly, the agent worked very hard for many months to get this deal to go through, and I think the double commision she earned was a nice incentive for her to work so hard.

3) The seller ended up bringing $5K to the closing table. This was requested of her by the bank, and she complied. Had she refused, the deal probably would have died.

Like I said, it was a long process, and we thought the deal was dead several times, but everyone kept pushing forward, and we finally got the property!

 

[barkley]

I just closed on a short sale 3 weeks ago.

I will tell you it was a lengthy process, but worth it in the end! We made the offer in February, and the bank didn't respond until June. We closed 2 weeks after the bank accepted.

Some things that helped:

1) The Seller had an attorney negotiate the short sale with the bank. Even with the attorney involved, it still took forever for the bank to say anything other than "the file is pending review," but I think it really helped to have the attorney working hard for the seller.

2) We went through the listing agent. I know a PP said that this is of no advantage, but in our case I think it really helped. First it kept everyone in the loop as to what was happening b/c she didn't have to play whisper down the lane (seller calls her agent, agent calls our agent, agent calls us, etc). Secondly, the agent worked very hard for many months to get this deal to go through, and I think the double commision she earned was a nice incentive for her to work so hard.

3) The seller ended up bringing $5K to the closing table. This was requested of her by the bank, and she complied. Had she refused, the deal probably would have died.

Like I said, it was a long process, and we thought the deal was dead several times, but everyone kept pushing forward, and we finally got the property!

you had a 2 week closing, my friend had a 1 week.

it seems like if a person is going to pursue this they need to have all their financial ducks in a row and be ready to close FAST once the bank approves.