[mntonv]

Brief background: We moved here last summer due to my hubby's job. We are renting for a couple different reasons. We signed a one year lease and have had a good landlord situation. They've always been very responsive. We knew their house was underwater, but at the time, they were committed to renting.

Now they recently contacted me to let us know that they are planning to sell, but not to panic as they will honor our lease (up 6/30) and see if we had any interest in buying the place.

We had ideally thought we'd rent one more year, but now that this has come up we are reconsidering. We have two kids in school and would not want to change. We love the home. I've always told my husband I'd be interested in buying it at some point. I'd really rather not move again.

What I'm wondering is what is the process for a short sale? Being that the house isn't listed, would it be easier for us? Go quicker? I'm really not sure what it's worth. Are there any realtors here that would be willing to pull some recent sold comps for me? Do I offer in that range? Try to go a little lower?

I guess I'm just looking for a little guidance on what I need to do first (besides mortgage approval). I've looked a little bit at the property tax site, what it's valued at there. Is there some sort of formula/percentage guide to go by as to market value based on property tax value?

Thanks for your help! I appreciate it. Let me know if you have any other questions for me.

[WestieJeff]

No it won't go any easier or quicker for you. The bank who ultimately approves the short sale doesn't care who you are, it only cares about maximizing revenue.

That said, it will require the seller to use a realtor to list the home. No bank will consider a short sale setup by the homeowner. That realtor should run comps and set the price of the home. Since you have a lock on the offer, I'd offer 5-10% under comps and let it ride with the bank. The bank will do their own BPO/appraisal and decide what they want to accept, but no reason to start high. Or just ask the sellers to list it 5%-10% under comps and make a full price offer. I'd shoot for max 10% under comps, you might get that without much hassle from the bank. You're not likely to get 25% under market and get approval from the bank.

You can pull your own recently sold comps on Redfin for free.

I don't know if your seller is distressed financially, if they aren't, you may not get any offer accepted by the bank or you may, depends on the bank, the situation, and the alignment of the stars and the moon.

Originally Posted by mntonv

What I'm wondering is what is the process for a short sale? Being that the house isn't listed, would it be easier for us? Go quicker? I'm really not sure what it's worth. Are there any realtors here that would be willing to pull some recent sold comps for me? Do I offer in that range? Try to go a little lower?

[ScoopLV]

I think that a short sale will make it less likely you get the house, not more likely. Once the lender approves the house for short sale, you're at the mercy of the lender and whatever their kooky rules are.

But if the landlord needs a short sale, you can't just offer him or her "X" for the house -- if "X" is less than the landlord's loan balance, at least.

You might get lucky and get the house. But I'd prepare for another move in the next 12-24 months.

[mntonv]

Thank you for your input!

So, if we submit an offer and then the landlord submits it to their bank, it could take a long time for it to come back with an answer I'm gathering. Does that bank negotiate/counter offer like a non-short sale or do they just say no?

I used the redfin site and based on what the landlord said they would list the property at, it seems like a fair price on the low end of other sold and current listed properties. I did look up their property tax records and saw that the market value there dropped $25,000 from this year to next.

I know they are distressed. The house will be listed for about half of what they owe and they own a second 'horse' property that is currently in the short sale process as well.

I was a little confused looking at the comps. Seems like a wide price range out there.

Thanks again!

[ScoopLV]

Originally Posted by mntonv

Thank you for your input!

So, if we submit an offer and then the landlord submits it to their bank, it could take a long time for it to come back with an answer I'm gathering. Does that bank negotiate/counter offer like a non-short sale or do they just say no?

Once it goes to short sale the landlord is out of the picture entirely, and you're dealing with the bank only. The bank will accept offers, once they list the house. And they probably won't list it until you are out of the house. So plan on moving.

Only then will you be able to make an offer, which the bank's representative will review on the third Tuesday of July, during a Leap Year. The bank will claim they're in a multi-offer situation, even if they're not. And then they'll sell the property to the first cash offer that comes along, because they don't want to deal with anyone who is financing.

That's short sales in a nutshell.

[mntonv]

I see what you're saying. Basically, the landlord is blowing smoke up my _ss. They are telling me that they will list the house with their agent, that I should submit the offer to the listing agent and then they will submit to the bank, at which point, the bank takes over, etc., etc. From what you're saying, that's not how it works.

Thanks.

[HSV2LAS]

Originally Posted by mntonv

I see what you're saying. Basically, the landlord is blowing smoke up my _ss. They are telling me that they will list the house with their agent, that I should submit the offer to the listing agent and then they will submit to the bank, at which point, the bank takes over, etc., etc. From what you're saying, that's not how it works.

Thanks.

+1 There's a reason why your landlord is acting this way. You have to look at it from their point of view. They don't want to upset the delicate situation. Your wish is not to move. However, the way the short sale works as pointed out by Scoop. We are certain the landlord is sugar coating it for you. Now you know the real picture of how the process works. No need to hammer it to the landlord. Might be worth the effort to work with the bank to see if there's any way around the process.

[ScoopLV]

Originally Posted by mntonv

I see what you're saying. Basically, the landlord is blowing smoke up my _ss. They are telling me that they will list the house with their agent, that I should submit the offer to the listing agent and then they will submit to the bank, at which point, the bank takes over, etc., etc. From what you're saying, that's not how it works.

Thanks.

The offers still go through the bank's listing agent. But then the offer(s) are sent to the bank's short sales rep, who looks at them once or twice a month, and uses criteria to accept/reject that would make Nostradamus throw his hands up and curse, "I give up!"

Then there's always the possibility that the landlord is taking your rent, and not paying the loan -- pocketing the money to have a nest egg for after foreclosure.

If it were me, I'd just go buy a house somewhere. No matter what happens with the short sale/foreclosure, you're likely going to have to move anyway.

[WestieJeff]

Sorry but this is so completely and utterly incorrect it is staggering.

What you describe would be closest to a foreclosure listing, nothing like a short sale.

In a short sale your contract is between you (the buyer) and the seller. The bank is considered a third party who merely agrees to accept less than owed for the property. The buyer has no contract with the bank nor usually any contact whatsoever with the bank.

The bank will never list a short sale, they don't even own the house. They have no legal ability to list a home until they own it.

The short sale process is roughly the seller lists the home for sale with an agent. Agent gets offers, which seller accepts one. Seller and agent then provide the offer and a prepared short sale package which includes financial statements, a letter why they are distressed, etc. That is eventually reviewed by the bank and the bank will either decide to accept the contract, counter the contract, or simply reject it.

Originally Posted by ScoopLV

Once it goes to short sale the landlord is out of the picture entirely, and you're dealing with the bank only. The bank will accept offers, once they list the house. And they probably won't list it until you are out of the house. So plan on moving.

Only then will you be able to make an offer, which the bank's representative will review on the third Tuesday of July, during a Leap Year. The bank will claim they're in a multi-offer situation, even if they're not. And then they'll sell the property to the first cash offer that comes along, because they don't want to deal with anyone who is financing.

That's short sales in a nutshell.

[Tek_Freek]

Originally Posted by ScoopLV

Once it goes to short sale the landlord is out of the picture entirely, and you're dealing with the bank only. The bank will accept offers, once they list the house. And they probably won't list it until you are out of the house. So plan on moving.

Only then will you be able to make an offer, which the bank's representative will review on the third Tuesday of July, during a Leap Year. The bank will claim they're in a multi-offer situation, even if they're not. And then they'll sell the property to the first cash offer that comes along, because they don't want to deal with anyone who is financing.

That's short sales in a nutshell.

On the plus side this is a leap year.

Good luck with your endeavor. I hope it works out for you. Banks be damned!