Advise on a short sale - Offer more to avoid dealing w short sale (Dayton: for sale)

[5kgirl]

I've been house hunting for a while now and just found a house that seems perfect for me at a great price roughly ~20% market value ...the only thing is that it's a short sale and they just started the process of getting permission from the bank for the short sale.

I don't want to deal with the hassle of a short sale (I've lost out on a couple of those after putting in an offer) so I am thinking of offering more than the list price, enough to pay off what is owed to the bank and convince the seller to list the property as a regular listing instead of a short sale.

The list price is $139900, my realtor says the seller owes ~150k and the market is around 175K. I am thinking about offering 150.

Part of my nervousness is that this house is in a great location and would give me a 10 min commute to work.

Is it foolish to offer that much on a short sale?
I know there are several factors that would play in this type of decision, but I'd specifically love to know if anyone else has ha experience with some like this? How did it turn out?

Thanks!

[beilart]

Short sales are a nightmare. You would be lucky if the bank came back in 3-6 months to tell you that they denied your offer of 139K. Banks have no interest in selling short sale. As long as the home is on their books, it is an asset. They make more money once it goes into foreclosure. If the comps in the area support the 150K for the home and it is what you really want, I would not hesitate to offer the 150K they owe on it. Just make sure you won't be upside down. You might also offer just 10K above what they owe but you will still have to deal with the lender on a short sale. See what the homes in the area have sold for in the last year or so, if any have sold. If you are comfortable with the 150K price, then go for it. Just make sure that you are pre-qualified for a loan, that your job is fairly secure and that you have a back up plan in case your job goes south. 150K is not too much for a home, depending on the area. Be prepared to stay in the home at least 10 years to build equity.

[5kgirl]

I appreciate the reply Beilart! My very minimal experience and subsequent research with short sales indicate that they are a nightmare so I'm hoping to avoid it with this house I like by offering about what the seller owes. I've been pre-qualified and the 150K is about the most I can go so I just hoping I will be able to convince the seller not move forward with the sale sale but to make it a regular sale.

[beilart]

I can't imagine that the seller won't cooperate. They get their payoff and keep their credit rating. Be sure to talk to their realtor or have your realtor do so.

[johnsonkk]

Since most realtor fees are 6%, you'll have to offer $159k unless they pony up some of their own cash to help sell their house. Maybe they can cover closing costs too - or else you spend more than the $159k. See the real estate link in the general forums on here for additional info on short sales.

[jjd76539]

Avoid short sales there is too much property for sale in the state at this time. In addition to this many of these properties are over valued or as the news says underwater.... Realators, banks,sellers are trying desperately to get the cash they spent on these over priced properties.

[RShak]

Ask the realtor if anyone else has made an offer, usually they will tell you if there has been one, which is why I would prefer to go with the listing realtor as they usually have more info, but they aren't usually allowed to give how much the offer is in most cases. ( except when the bank wants to bring it to bidding with all interested parties. ) in this economy people aren't making as many offers as they used to. So you're in the best seat, not the bank. Do not offer 150k, offer 120, or less. If you have cash, they'll be more likely to accept it. I knew someone who bought a house for 40k and the people owed 80k on the house, so that is half, so even a 75-80k cash deal sounds very realistic.

They want the house off their books, the more they can get off the better and cheaper it is for them.

I am not sure how Kentucky works, but banks hate foreclosures as far as I know. They lose money, I remember in Dayton Ohio they would buy the houses for like 34k at the sheriff auction and sell it for 15k, there had to be some kind of tax credits in there or something for them logically, or they wouldn't do it. But attorney fees and grass mowing fees, and tax fees, they add up quickly. Trust me, offer what you want and hopefully they will get back to you sooner than later. Some banks are a lot quicker than others when it comes to responding.

Also, someone said above about the realtor fee being 6%, that varies it goes between 5-7% on average, but that has no effect to the banks usually. When I bought my house they gave more than 6% to my knowledge, plus a $1,000 bonus for selling it. so as far as I know, they don't even take the realtor fee into consideration when you bring an offer.

Hope this helps