[YgoIgo]

I just spent 6 months in escrow on a short sale where the seller accepted my offer. December. On the 1st of July the sellers bank asked me to pull my credit for a 3rd time to keep my records updated. I'd already been approved two times prior. The same bank that asked me to update my credit records with them on the first of July had already foreclosed on the seller 4 weeks early. I've been in a battle for a month, including threat of law suite, to get my earnest money back. Something that should have happened 2 months ago. My original Realtor and the sellers Realtor will be included in the suite if it comes to that.
There is no such thing as buying a short sale via loan today unless you pay 20% more than the house is worth, then it won't appraise. I'm single and was trying to buy a simple townhouse to retire to. I am in the top 5 percentile for credit ratings in this town. I offered 35% down. If I wanted a car of the same value I would have driven away with it inside of an hour. 30,000 vacant houses in Las Vegas and I can't beg somebody to sell me one. Everybody who did this to the good people are going straight to hell.

[Californiapch]

Originally Posted by tbill618

Ouch. My sympathies. Any reason for the long process? If you don't mind me asking, who is the lender?

I am not sure. A big bank name I think. I am from Canada and this is a winter condo for a few of us so we are ok with the timeline now, but would like possession by October.

Not sure of the reason. Just taking way to long.

My realtor said most short sales take 3-6 months but some have taken 6-12 months. Stupid if you ask me. We should have done a few more offers....


Brian

[irishspy]

If you plan on a short time period to buy don't. I started in late Feb 2012 cash sale short sale and just finished the closing July 26 2012. Same story as others wait for this wait for that. When the bank wanted something it was get it here by yesterday same way with the closing they wanted ever thing done within 7 business days but only gave us a 4 day window to get them the money because they did not tell us the amount until then. So be prepared for a long process don't get too high or low during the process make sure you have a good real estate agent (we did). I also have to extend some sympathy to the sellers because they are put through this process on the other end. I just did not ever realize how cash up front could be such of a problem. I know the paper work side of short sales and foreclosures is stacked up like wood but again that is the banks who cut back on employees and dumped the work on the others who are left. Again this hole country needs Banking regulations which are fare and realistic not just a money grab by the banks and lawyers.

[modhatter]

I am waiting for short sale now, and can't help pondering this question. Since real estate prices have undoubtedly risen quite a bit since the beginning of the year, and what you bid on at the time you submitted your contract was fair market value at that time, but five or six months later would fetch a higher price - do they always come back to you wanting more money since the market has since gone up since your initial contract price?

[tbill618]

Originally Posted by modhatter

I am waiting for short sale now, and can't help pondering this question. Since real estate prices have undoubtedly risen quite a bit since the beginning of the year, and what you bid on at the time you submitted your contract was fair market value at that time, but five or six months later would fetch a higher price - do they always come back to you wanting more money since the market has since gone up since your initial contract price?

That's a good question. From what I understand from my agent, towards the end of the process the bank will use the BPO (Broker produced opinion) as a guide to value the property and they will present a price to you. Whether the bank is open to you presenting an alternative opinion or not depends on the bank. The initial price you set with the seller means nothing.

This is a big danger in a rising market.

[irishspy]

Hi Mad Hatter, We bid low by $4,500.00 First the seller accepted and his agent. When it went to the title co.and the bank a BPO as done by a independent real estate agent. It was assessed at the original selling price. So we accepted it which then locked them up at that price. So the underbid did not work. We put down $500.00 earnest money at the beginning and then we had to put another $500.00 after the BPO was done. This is when I got worried same concern as yours. 2 weeks before our acceptance letter the bank asked for $3,000.00 more from the seller. I do not know the reason but the sellers lawyer negotiated a settlement. If the seller and bank could not settle they would have come back to us (the buyers) and asked for $$$ from us. Lucky for us they worked out something. Please keep in mind we could have backed out and got our money back. After they settled we got our acceptance letter. I believe if the bank wants more money it has to come from the seller each bank is different we were dealing with Bank of America which is suppose to be one of the worse ones to deal with. I do not know if you are a cash buyer like us but here is some advise. If you have your money in investments check with (if you Have it) the financial group you have it in. See how long it ill take you to get the amount you need. If they wire it for you which is required if not it delays the closing which can cause problems. Be ready to jump through hoops for the bank and title co. they want ever thing yesterday. I had the house inspection done 3 months before our closing so it would speed up the process when the closing happened. That money you do not get back. We did not get our closing statement until 4 days before the closing so we rushed ever thing and our closing was done electronically because we live in NYS and Ma. and the seller lives in Florida. So the whole process started mid Feb. and we closed July 26th. How funny they call it a short sale which it is not. Just keep in mind the seller wants out as bad as you want in. I would also figure 1.5% to 1.70% of the selling price for closing cost.Google short sale process in Nevada they have good info. Hang in there but anyone expecting a quick process don't and make sure you have someplace to live in before you start the process if not you may end up being a renter.

[lvoc]

Originally Posted by tbill618

I do not understand half of what you are saying.

The price I am working is easy? Meaning I should not have a lot of problems with multiple bidders or the bank? Shorts should not be an issue? How?


"Or if you are chasing the good deal than proceed as if you are chasing a short." I am not trying to get a deal. I just want to pay market value for a house. You do not find market value in a multiple bidder situation.

The problem is that there are two price lines. A very competitive Short/REO one and a relatively standard non-distressed one. And the hooker is they differ in price by $15 to $25 per square foot.

So if you go after a non-distressed it will feel like a normal rational market. You will also almost always be the exclusive bidder and you negotiate without any of the complications. But you will not get them down to a price competitive with a Short/REO.

This drives Appraisers nuts. The general rule is that a short or REO is not a suitable transaction for a comp. But in many cases there are no non-distressed sales...so what now?

[modhatter]

Ivoc Do you know if the appraiser is restricted to only those sales that have closed all ready? Do they go out to the property and inspect the property like in a normal sale? Reason I ask, the house right next door was sold (about 1450 sq. ft versus one I am waiting on at 1580 sq. ft) Next door property was short sale and sold for $15,000 more, but is on a huge cul-de-sac lot (about 1000 sq.ft bigger), with large pool, rv gate and home in better condition. Recently, one sold in neighborhood, not distressed 1460 sq. ft, smaller lot, but nice condition inside with plantation shutters, laminate wood floors, and large patio cover in back. for $15,000 more, and will probably be closed by the time the one I bid on is ready. Then one other sold and closed beginning of year (short sale) for $10,000 less than mine. (same sq.ft. and model)

However, I actually paid more as I was told by realtor that I had to pick up and agree to pay the real estate commission and some of sellers closing costs (adding another $7,000 in costs) Was told by realtor that all short sales are structured this way, but since found out differently. (He lied) So, long and short. I don't know what to expect. Real estate agent (dual agent) says 50/50 bank will come back asking for more money.

[WestieJeff]

By appraiser, I assume you're referring to the short sale price, which will be done usually by a real estate agent, called a BPO (broker price opinion).

Sometimes they go into the property, sometimes they drive by, sometimes they just use the MLS listing info.

They aren't paid very much for them, I think it's around $50-75, so the amount of time they put into it is commensurate.

And you'll never get to actually see the BPO, the bank keeps that info. You won't know if they added or took money away for a pool (for example) nor the amount. You'll just hear that they want $x more or they're accepting the price you offered.

I'm not sure how the rising prices are factored in either. A normal appraisal will have a price/time adjustment (up or down). I'm wondering too since I have a short sale offer in the works right now as well.

Originally Posted by modhatter

Ivoc Do you know if the appraiser is restricted to only those sales that have closed all ready? Do they go out to the property and inspect the property like in a normal sale? Reason I ask, the house right next door was sold (about 1450 sq. ft versus one I am waiting on at 1580 sq. ft) Next door property was short sale and sold for $15,000 more, but is on a huge cul-de-sac lot (about 1000 sq.ft bigger), with large pool, rv gate and home in better condition. Recently, one sold in neighborhood, not distressed 1460 sq. ft, smaller lot, but nice condition inside with plantation shutters, laminate wood floors, and large patio cover in back. for $15,000 more, and will probably be closed by the time the one I bid on is ready. Then one other sold and closed beginning of year (short sale) for $10,000 less than mine. (same sq.ft. and model)

However, I actually paid more as I was told by realtor that I had to pick up and agree to pay the real estate commission and some of sellers closing costs (adding another $7,000 in costs) Was told by realtor that all short sales are structured this way, but since found out differently. (He lied) So, long and short. I don't know what to expect. Real estate agent (dual agent) says 50/50 bank will come back asking for more money.

[tbill618]

Our short sale was accepted by the seller. The good news is that the seller's agent has a lot of experience with short sales. Our agent pulled his list of closed homes from the MLS and the first two pages, 20 homes, were all short sales.

I found this article on what buyers should expect from the short sale process. It seems the biggest threat to the short sale is a flaky buyer.