Anyone have direct experience making offers/purchasing short sales?

Gone_2022

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Sep 4, 2013
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We did not make an offer on a short sale during our looking however our realtor and broker advised against it unless we have a lot of time to kill with the strong chance we may not even get the home.

Basically we were told the process can be very lengthy. The bank can take a long time to respond to your offer, then they may counter your offer etc...... or you may go through the process for 5-7 months only to have everything rejected. Even if you offer the short sale price.

Or they simply may never respond to you
 

RICH17

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Anyone have direct experience making offers/purchasing short sales?

buhler.

After showing you that one I looked at on the river, it seemed short sales were crazy to try and get into. No real time frame. Bank will take a while to consider multiple offers. Can be worth it if you're looking at flipping the home but not if you need to move into it.
 

cap42

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Mar 22, 2005
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The first house I attempted to buy was a short sale, it went on for about 3-4 months before it fell through. Honestly I was trying to buy it via FHA since I didn't have 20% down at the time and the FHA constraints were the reason it fell through.

The house needed a few minor repairs, nothing structural but FHA basically said no deal because they were worried I couldn't pay the mortgage and maintain the house.

This was 13+ years ago when FHA had a much more strict rules on lending, the reason it took so long was how quickly the bank responded to the initial offer which was 2k below their listing price. I basically sat for 3-4 months to move past step 2 only to find out step 3 was a no go.

I have never looked at another short sale again.
 

Gone_2022

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Sep 4, 2013
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and fwiw, any real estate transaction can fall apart 3 months into it.

my fiance's house was going to close after being under contract for 3 months and fell through a week before closing.

that was neat.

fuckers.



That is completely true. However a good buyer with their affairs in order should be able to close rather quickly. My wife and I closed in under 45 days on our home.

Every sale is different. However the further you go in the contract process the more the buyer has to lose, and the more legal issues come into play if someone backs out for no legit reason.
 

Flyn

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I have had short sales that were smooth transactions and closed in 2 months and I have had nightmare transactions where the banks greatly increased the frustration and difficulty levels.

There are extra steps involved in short sales.

First, the seller has to accept your offer same as a normal sale.

Then they need to prove to the bank that their financial situation is bad enough they can't pay the mortgage. This is the step that usually takes the most time since banks can ask for a lot of documents from the seller and sometimes take a while to review them and then may ask for more documents and reviews, etc.

If you get through these steps, the bank will have the home appraised and decide if your offer is acceptable to them. A lot of deals fall apart when the bank comes back with a higher price. It's important for the selling Realtor to have done a good job pricing the home to avoid appraisals coming back too high.

After the seller review and appraisal processes have been successfully completed, the bank may have more paperwork for the buyer. Once this paperwork is returned and approved, the sale can finally proceed and close usually within 30-45 days. The bank limits the time their approval is good for so the sale NEEDS to close within that time period or the buyer's agent will need to ask the bank for an extension which may or may not be given. Remember, these homes may be in the foreclosure process so the bank may decide to foreclose if the short sale does not close on time.

2nd mortgages make these transactions lengthier and more difficult. It's hard to get one bank to agree to take less money than they are owed and harder to get two to do so, especially since the 2nd bank usually won't get much from the sale.

Most banks require buyers sign an arms length transaction document so the buyer cannot sell or rent the home back to the original seller.

In general, I tell my customers a short sale will usually take between 2-6 months, in rare cases longer. If they can wait patiently, they may be able to save a little money off the price of a comparable non-short sale home. If they need a home soon or don't have the patience to deal with a bank's processes, a short sale is not the home they should be targeting.
 

Gone_2022

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Sep 4, 2013
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I mean being that close to closing if you wanted to be a dick you could have for sure. At that point the home inspection was done and passed, bank would have appraised the home, etc etc.

Yes you can walk away at any point but you should have been able to keep the earnest money? I don't get why you couldn't. We were advised from the start that our 2k earnest money would be gone if we walked out of the deal.

The above did not include structural damage, inspection items that could not be negotiated, etc. basically if we just said nah we don't want this home for no reason at all we lost our earnest cash.
 
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