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This might have been discussed here somewhere, so forgive me if I am bringing up and old subject.
If short sales are soooo hard to buy and work with, and usually end up going back to the bank anyway, why are they even listed and shown? On the rare chance it might sell? How does a short sale work, in lay terms...
Is it better to look only at bank owned and non short sale homes?
A short sale is when a homeowner tries to sell his house for less than what he owes on it. Not everyone should look at short sales because you need a lot of patience and time and not be in a hurry to get into a house.
Why list them? Because most of the time they actually sell and the owner can avoid foreclosure on their record & make more damage to their credit.
Are they always a good deal? No. Many homeowners neglect the house once they are behind on payment thinking "I've lost it anyway". Thus most of them are sold in as-is condition aka without any repairs.
If you have 2 loans on the property, both lien holders (banks) have to approve the short sale. Once an offer is made, the listing agent gives a "short sale package" to the first lien holder then they decide how much of a loss they want to take, this is the part that takes a long time. Weeks.... months... once the first lien holder accepts it then they contact the second lien holder and make them an offer usually a couple thousand etc... because it if gets foreclosed the second lien holder will not get anything, so it's in their best interest to accept any offer of cash...
At closing the first place that gets any money is the tax authority. about 99% of the time, when homeonwers are behind on their mortgage, they are behind on the taxes as well. Uncle Sam has first dibs then whatever the balance goes to the first lien holder etc. per contract.
Of course I skipped on many steps as in what is in the short sale package consists of (realtor jargon) bank has to get a 3rd party BPO (broker price opinion) you get the idea, etc...
Thanks, so many I see are short sales, we will be in a position once we sell this house that we are not in a hurry to buy, we have somewhere to live for as long as we need to, so time is not a problem..
Gosh you hate to go through all that and two or three months later it falls through and in the meantime you have lost out on other homes.. you would have to really love the home you offer on...
Now once the home is foreclosed, I would imagine the process is a little faster since the bank already has it and needs to unload it?
What a mess....
thanks again and all insight appreciated since most of the homes that interest online seem to be short sales..
Dogmom you are moving to (or trying to at least) to CA correct? In our part of CA there are also a lot of short sales. A friend who recently got one said that for every short sale there are like 6 people bidding on it so what she had to do was have offers in on several short sales at once and it took awhile but she finally ended up getting one.
Foreclosure is generally a bit faster but the lender is STILL facing a loss and THEY DO NOT LIKE TO DO THAT AT ALL...
Mortgages are "cash machines" as far as lender is concerned. The borrowers are SUPPOSED to send in all the principal and interest and/or pay off the loan amount early so the lender can make their money. Once the loan no longer generates cash the lender rapidly goes from "normal operations" to rearranging the deck chairs to do everything they can to keep from becoming the Titanic. Lenders have had to sell non-performing loans at big discounts and that has caused a tremendous amount of disruption as the new owner of that debt is almost certainly trying to rebalance the potential to get SOMETHING close to what they paid for the quality properties vs realizing too late that NO ONE is going to want some of these properties at any price... Some lenders in that position are almost certainly working the lobbyists to get the government to lash together another rafts to "bail them out". If they can't find new buyers (maybe through FHA financing) maybe the government will accept the crummy properties into HUD. There are tremendous efforts to try and cobble together things that will "support" prices in the least desirable areas. MEANWHILE, at the other end of the market, the limits on how large a loan the FHA will underwrite is causing battles between the comically overinflated areas, like California, and those that are merely swollen, like the DC suburbs. While back in Chicago the lenders have frozen out MANY of the "good risks" because so many lenders have major problems with the cheaper, fatter portion of their loan portfolio...
DogMom - you know we are in the same situation. My husband just sent me an email with 56 houses in FOlsom he's love to look at - each one was a short sale - and I'm worried "Will we really get those?" And we have 40% down!
I have a friend who did a short sale in Roseville and she's very happy with it.
Plus my realtor who send me house market updates (via ziprealty) said "I'm not sending you short sales, because they aren't worth it" Well that just cut our house available in half! I mean I understand it's easier to negotiate for a home when its NOT a short sale - but why rule them out if one happens to be a "dream home"
DogMom - you know we are in the same situation. My husband just sent me an email with 56 houses in FOlsom he's love to look at - each one was a short sale - and I'm worried "Will we really get those?" And we have 40% down!
I have a friend who did a short sale in Roseville and she's very happy with it.
Plus my realtor who send me house market updates (via ziprealty) said "I'm not sending you short sales, because they aren't worth it" Well that just cut our house available in half! I mean I understand it's easier to negotiate for a home when its NOT a short sale - but why rule them out if one happens to be a "dream home"
Citygirl..well looks like we are in the same boat...we should meet up once we get there...coffee or a drink...most of the homes I see online are short sales. And if you don't look through them you are right, you are taking at least half of what is available and in your price range off your list.
Have not thought about looking in Folsom..we are originally from Newcastle and we are more comfortable with that end of the valley..would love to be out in the country again, but we are downsizing and too old for all that property. I miss my trees, though. No trees here but stick trees, and red rocks and red dirt. I wanna come home!!!
Whoops I meant the email had 5 or 6 houses - definately not 56 ! HA!
There are some good trees around - I wouldn't actually think Roseville cuz to me that much more tract homes with new tiny trees...have you looked at Fair Oaks?
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to at least) to CA correct? In our part of CA there are also a lot of short sales. A friend who recently got one said that for every short sale there are like 6 people bidding on it so what she had to do was have offers in on several short sales at once and it took awhile but she finally ended up getting one.
