Home
Log in / Sign Up
    Private Messages   Advanced Search   Rules   New User Guide   FAQ   Advertise   Contact Us  
Forum -> Household Management -> Finances
Short sale: What to expect?



Post new topic   Reply to topic View latest: 24h 48h 72h

amother
Green


 

Post Mon, Aug 15 2016, 8:46 pm
We are looking to into purchasing a house with a short sale. Any advice in regards to the process/what to look out for would be very appreciated. Thanks!
Back to top

Amarante




 
 
    
 

Post Mon, Aug 15 2016, 10:02 pm
It's complicated because the bank has to approve the amount if the offer. If there are any other lien holders, they also have to approve the amount they would get from the offer.

If you are not in immediate need of a new home and are okay if the transaction doesn't happen, it can be fine.

I live in a condo and am in the Board and I dealt with a short sale situation when one if the units went into shirt sale. The homeowner had also stopped paying maintenance and we had a lien which was of course second priority to the first mortgage.

The negotiations with the bank took an astoundingly long period of time. But then we as a Board were astounded that the bank had not foreclosed for almost two years. Obviously some banks act more quickly because there hav been a few foreclosure sin my building

The amount offered to us was not high enough so we didn't agree to the short sale.

We foreclosed based on our lien and then we rented out the unit and didn't pay the first mortgage. The bank didn't foreclose on us for almost two years so this bank was obviously exceptionally slow in everything so I assume many shirt sakes would go more quickly.

Since the seller was short of money, there might be maintenance issues that weren't addressed. This would be less important in a condo but a single family might have expensive deferred maintenance so inspection would be critical.

Again, in my experience the issue is that you might spend a LONG time and wind up without the house. But if you don't have a pressing need and have a temperament to just go with the flow, theoretically it could be fine. I don't think there are major bargains though since the housing crisis is somewhat over and a bank might be less inclined to take a lowball offer. Of course, many banks don't want to deal with a foreclosure.

This is based on California real estate law which has a specific form of non judicial foreclose. Results will vary depending on the law and also on the stat of the individual housing market in the area.
Back to top

amother
Slategray


 

Post Mon, Aug 15 2016, 10:48 pm
amother wrote:
We are looking to into purchasing a house with a short sale. Any advice in regards to the process/what to look out for would be very appreciated. Thanks!


I think it will be near impossible to buy a house thru a short sale. The reason is because almost all short sales are shady. Imagine a homeowner has a house worth 500k and his mortgage is 600k. He can't (or stops) paying his mortgage and the bank agrees to a short sale. The bank might allow this 500K house sell for 300k or even less. The homeowner knows this and will make sure that his cousin, friend, guy in shul, or sheitel macher will buy the house with money being exchanged under the table. This is 100% illegal. This is done almost all the time. I've spoken to real estate agents about this and privately they will acknowledge this.

The biggest proof that this goes on ALL THE TIME is that I'd like to meet the person who actually bought a 750K house for 450K via a short sale. It doesn't happen. The agents have to advertise the property in the paper as if it's for sale to the public, but if you respond and try to set up an appointment to see the property the agent will tell you the owner isn't home that day, he's painting, he's exterminating, or whatever. The agent will try not to allow a "regular person" to see the house because it's a waste of time. The deal is already done as the owner is going to "sell" the property at a steep discount to a friend.
So my advice would be, if you can do it then go for it. However, I expect it to be near impossible.
Back to top

amother
Green


 

Post Mon, Aug 15 2016, 11:17 pm
amother wrote:
I think it will be near impossible to buy a house thru a short sale. The reason is because almost all short sales are shady. Imagine a homeowner has a house worth 500k and his mortgage is 600k. He can't (or stops) paying his mortgage and the bank agrees to a short sale. The bank might allow this 500K house sell for 300k or even less. The homeowner knows this and will make sure that his cousin, friend, guy in shul, or sheitel macher will buy the house with money being exchanged under the table. This is 100% illegal. This is done almost all the time. I've spoken to real estate agents about this and privately they will acknowledge this.

The biggest proof that this goes on ALL THE TIME is that I'd like to meet the person who actually bought a 750K house for 450K via a short sale. It doesn't happen. The agents have to advertise the property in the paper as if it's for sale to the public, but if you respond and try to set up an appointment to see the property the agent will tell you the owner isn't home that day, he's painting, he's exterminating, or whatever. The agent will try not to allow a "regular person" to see the house because it's a waste of time. The deal is already done as the owner is going to "sell" the property at a steep discount to a friend.
So my advice would be, if you can do it then go for it. However, I expect it to be near impossible.


Thanks for the information.

I don't think this will be an issue. The home is not owned by a Jew. It was for sale for a while and now the price was reduced.
Back to top

amother
Slategray


 

Post Mon, Aug 15 2016, 11:34 pm
amother wrote:
Thanks for the information.

I don't think this will be an issue. The home is not owned by a Jew. It was for sale for a while and now the price was reduced.


I suppose it's possible. A telltale sign will be when you call the listing agent to set up an appointment to see the home. If the agent is making excuses as to why you can't see it, the house is really not for sale.
Back to top

amother
Green


 

Post Tue, Aug 16 2016, 9:13 am
amother wrote:
I suppose it's possible. A telltale sign will be when you call the listing agent to set up an appointment to see the home. If the agent is making excuses as to why you can't see it, the house is really not for sale.


Yes, I was able to schedule an appointment.

In addition, I was wondering what a reasonable amount to offer. 10, 15, or 20% of the asking price?
Back to top

Scrabble123




 
 
    
 

Post Tue, Aug 16 2016, 9:28 am
Not all short sales are shady.... There are plenty of legitimate pre foreclosure a, foreclosures, short sales, and bank owned properties on the market in every state. If you want more information on the short sale process PM me since I need to run and don't want to forget to explain it to you.
Back to top

amother
Slategray


 

Post Tue, Aug 16 2016, 9:28 am
amother wrote:
Yes, I was able to schedule an appointment.

In addition, I was wondering what a reasonable amount to offer. 10, 15, or 20% of the asking price?


Does the asking price already reflect the fact that this is a short sale? In other words is this for example a 500K house and the asking price is 325K?
Back to top

amother
Green


 

Post Tue, Aug 16 2016, 9:37 am
amother wrote:
Does the asking price already reflect the fact that this is a short sale? In other words is this for example a 500K house and the asking price is 325K?


The staring price was high and now they lowered it to a fair price.
Back to top

amother
Seafoam


 

Post Tue, Aug 16 2016, 9:45 am
- Make sure you get a GREAT title company. Not just to see if there are leans. But to look out for other things.
For example my DH once bought a house and it had not had its water meter checked in years. The title company had just checked if there were any outstanding bills. There were none.
When they came to check the meter the first time there was 10,000 outstanding bill. In that state the owner is responsible for the full water bill.
Since than whenever my DH buys a home he will not close until all utility bills are current and up to date. He has had closings delayed, or even canceled due to that, but this issue has come since - with large bills.

Offer a value you are embarrassed to offer, and let them meet you back.
Back to top

amother
Saddlebrown


 

Post Tue, Aug 16 2016, 10:03 am
Short sales are anything but short! They take a really long time and the owners often try to drag them out as long as possible. We were advised to stay as far away from a short sale as possible. We didn't listen and went forward with it because it was a great deal - it turned into an absolute nightmare!
Back to top

amother
Orange


 

Post Tue, Aug 16 2016, 10:32 am
I bought my house that was on a short sale. Nothing shady, but it is difficult for the brokers and everyone involved. You are dealing with two banks. The one you really trying to get a mortgage from and the one the seller is making a deal with. We went into contract knowing that it's not a done deal until the seller's bank approves the short sale. When my bank was ready, his wasn't. When his bank was ready, mine wasn't. There are a certain amount of days from the approval that you must close on the house. You should have a good lawyer. It was murderous, but I got a good deal and a nice house. My mortgage broker said never again.
Back to top

amother
Slategray


 

Post Tue, Aug 16 2016, 10:43 am
amother wrote:
The staring price was high and now they lowered it to a fair price.



That's strange. A short sale is when the owner negotiates with his lender to accept less than the amount owed on the loan. The initial asking price is steeply discounted, probably between 25%-40% of what the true value of the property is worth. It doesn't make sense that the asking price was above the real value because if the seller could get that price then 99% of the time he would not need to have the bank accept less than the his loan balance as the high sale price would pay off the loan without having to resort to doing a short sale. In theory what's attractive as a prospective buyer about a short sale is the discounted price. I've never heard of a short sale where the asking price was higher than similar properties. It should be the opposite.
Back to top

amother
Green


 

Post Tue, Aug 16 2016, 11:07 am
[quote="amother"]That's strange. A short sale is when the owner negotiates with his lender to accept less than the amount owed on the loan. The initial asking price is steeply discounted, probably between 25%-40% of what the true value of the property is worth. It doesn't make sense that the asking price was above the real value because if the seller could get that price then 99% of the time he would not need to have the bank accept less than the his loan balance as the high sale price would pay off the loan without having to resort to doing a short sale. In theory what's attractive as a prospective buyer about a short sale is the discounted price. I've never heard of a short sale where the asking price was higher than similar properties. It should be the opposite.[/quoet

It was not a short sale a few months ago when I called the agent. Just now they lowered the price and when I called the agent again she said it is now a short sale.
Back to top

amother
Slategray


 

Post Tue, Aug 16 2016, 11:19 am
[quote="amother"]
amother wrote:
That's strange. A short sale is when the owner negotiates with his lender to accept less than the amount owed on the loan. The initial asking price is steeply discounted, probably between 25%-40% of what the true value of the property is worth. It doesn't make sense that the asking price was above the real value because if the seller could get that price then 99% of the time he would not need to have the bank accept less than the his loan balance as the high sale price would pay off the loan without having to resort to doing a short sale. In theory what's attractive as a prospective buyer about a short sale is the discounted price. I've never heard of a short sale where the asking price was higher than similar properties. It should be the opposite.[/quoet

It was not a short sale a few months ago when I called the agent. Just now they lowered the price and when I called the agent again she said it is now a short sale.



Can you ask the agent which bank is authorizing the short sale? If it's a big bank like Bank of America it's really strange and in fact suspicious that the price is not very low.
Back to top

amother
Green


 

Post Tue, Aug 16 2016, 11:23 am
amother wrote:
Can you ask the agent which bank is authorizing the short sale? If it's a big bank like Bank of America it's really strange and in fact suspicious that the price is not very low.


Thanks for pointing that out. I will ask.
Back to top

Amarante




 
 
    
 

Post Tue, Aug 16 2016, 11:27 am
amother wrote:
Can you ask the agent which bank is authorizing the short sale? If it's a big bank like Bank of America it's really strange and in fact suspicious that the price is not very low.



L why suspicious?

The bank has nothing to do with the shirt sale except that it has to approve forgiving the amount that is less than the mortgage. The lending bank for seller migh get involved if the seller wants to delay foreclosure. Many banks will delay foreclosure because the bank wants to avoid the hassle and might lose more on foreclosure than a short sale.

Short sales are becoming rarer since banks no longer grant mortgages without a significant down payment and most places have market values increasing so that the mortgages are less frequently under water.

For some reason, people think a short is better than a foreclosure but they are pretty equivalent in terms of a credit hit. I am not sure but at some point the limited exemption in taxing the forgiven amount was due to expire and I don't think the exemption was extended.
Back to top

amother
Slategray


 

Post Tue, Aug 16 2016, 12:57 pm
Amarante wrote:
L why suspicious?

The bank has nothing to do with the shirt sale except that it has to approve forgiving the amount that is less than the mortgage. The lending bank for seller migh get involved if the seller wants to delay foreclosure. Many banks will delay foreclosure because the bank wants to avoid the hassle and might lose more on foreclosure than a short sale.

Short sales are becoming rarer since banks no longer grant mortgages without a significant down payment and most places have market values increasing so that the mortgages are less frequently under water.

For some reason, people think a short is better than a foreclosure but they are pretty equivalent in terms of a credit hit. I am not sure but at some point the limited exemption in taxing the forgiven amount was due to expire and I don't think the exemption was extended.


It's suspicious because the bank is the one that sets the short sale price. Homeowners don't agree to short sales unless it's worth it. Worth it means that a significant part of the debt will be forgiven. With that in mind it's strange that the price of the house was very high.
Back to top
Page 1 of 1 Recent Topics




Post new topic   Reply to topic    Forum -> Household Management -> Finances

Related Topics Replies Last Post
Ruby shoe sale
by amother
30 Yesterday at 9:07 pm View last post
Looking for an affordable short term rental in monsey Etc. 2 Mon, Mar 25 2024, 12:20 am View last post
Why do wigs go on sale? 10 Fri, Mar 22 2024, 11:30 am View last post
Short note for alien theme?
by amother
4 Wed, Mar 20 2024, 12:51 am View last post
Floafers sale
by amother
2 Tue, Mar 19 2024, 12:44 pm View last post