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  • Short sale homes

    I'm curious if anyone has bought a home by way of short sale. Was it good or bad for you when you did. Was it a quick process or did it take a long time for you.

    I've been thinking a lot lately about buying a house but wasn't sure was the best way to go. And whether going by way of short sale homes vs homes on auction would be the best route.

    Thank you
    "A life is not important except in the impact it has on other lives." - Jackie Robinson


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  • #2
    I bought property in 1997 in a short sale. It was a very long, drawn-out process, and the lender was a real nightmare. Even though certain aspects of the transaction were already documented in signed agreements, the lender would attempt to back out. Fortunately, I have a JD and was working with a Realtor who had experience with short sales so we were able to bully the lender to closing.

    My advice to you would be work with a Realtor who specializes in short sales. He or she will know the 411 on the lenders. Some lenders are willing to make a short sale close, but others are complete idiots who just will not let the deal work. No sense getting into bed with a lender who will not let you make a deal work. There the Realtor can help.

    Of people I know who have successfully closed a short sale, all have experienced a longish escrow. Most lenders will not commit to more than sixty days for buyers (and many only 30 or less), so therein you can get shafted if you're not pre-approved and have some kind of rate lockdown before entering into a short-sale. You can end up being in a gap between your pre-approval commitment expiring and deal approval on the short sale.

    If you have lots of equity in your present home, you can refinance that and use the proceeds for the short sale, then finance the new short after you close to pay off the refinance but you will have to choke on the points unless you already have a good relationship with a lender.

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    • #3
      Buying a short sale home is a very long drawn out deal....Ive neve done it personally, but some close friends of mine did....took them two months to hear back from the bank as to whether or not their offer was accepted.....
      'Evil always wins when Good does nothing'-Anonymous

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      • #4
        from what I've heard short sale is a nightmare. Especially if there are two mortgages from two different banks. I would say go for it only if you have a lot of patience, otherwise stay away.

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        • #5
          I understand short sales can be difficult. Instead, you might look at REO or bank owned properties. These are houses that have already defaulted back to the bank.

          Right now banks have a ton of REO properties and they are often sold for less that the property's actual value and less than the value of the mortgage, just to get them off the books and to get cash flowing back into the bank.

          My house was an REO property. The last owners purchased it on in boom times back in 1989 and had a $500k mortgage. When the economy went in the dumper in 1993, they walked away from the house, still owing $375k. The bank had so many people defaulting on houses that I was able to buy it from them for $302k in 1994.

          The same thing is going on today. Banks are unloading houses for a fraction of the defaulted mortgage, just to recover some of their losses. Find a realtor you trust and ask them to steer you towards REO houses. You might be surprised at the bargains you find.
          Going too far is half the pleasure of not getting anywhere

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          • #6
            I bought a home on a REO or bank owned, the next phase after short sale. It was pretty quick.

            Much like L-1 I bought my REO on a 170k property, picked it up for 100k.

            The only "quick" process is buying at the court house steps at the auction. Just be aware that you can end up paying more for the house, because the bank will be at the auction and they will make the first bid even though it is technically their house. Their bid will be the remaining amount left by the previous mortgage in default.
            The beatings will continue until morale improves.

            Originally posted by jcioccke
            After I hit it, I would be disgusted with her

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            • #7
              Short Sales are fun to deal with.
              Wait time can be anywhere from 2-6 months or longer depending on how many liens and judgments need to be negotiated with the lenders to approve a short sale.

              The initial offer you put in will most likely not be the guaranteed buying price unless you are able to negotiate why you should keep that price and not go any higher.

              Things that help:

              1. BPOS (Broker Price Opinions) - It can be drive by or interior/exterior based value. A real estate agent is sent out to determine what they think the house will sell for in 30/60/90 days and writes their opinion on a BPO form. You can pay for your own BPO to be done. (Bank usually pays them $60, offer a little more)

              2. If you keep getting counter offers from loss mitigation reps you talk to about the price and their BPO (Bank's BPO, not yours) comes in way too high priced. This means they believe the property is worth more than what you are offering. You can order an appraisal be done ($90-300) which will determine the as-is and as-repaired values of the house. If you have to go this far, most lenders will realize you aren't a newbie and you can negotiate well enough.

              3. Or do a A-B and B-C transaction Short Sale. (My preferred method). Basically think of it in these terms: The Homeowner that needs to sell is A, the Investor who wants to buy at a discount and sell at market price is B, the end buyer who wants to buy at market price as soon as possible is C.

              Basically the investor will work with the homeowner to purchase the property, negotiate, and relist the property during that process. Once the short sale is approved by the bank, that's when they get an end buyer in place (you) and close their transaction, wait a day to get owner of record for the title, then resell to you. Both parties are happy.

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              • #8
                I forgot to mention that my mom is a Realtor so she will mostly like help me find a home. I know she won't want her only child in a dump. I just thought I asked to see what and if anyone had experience buying a home via short sale.
                "A life is not important except in the impact it has on other lives." - Jackie Robinson


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                • #9
                  you should look specifically for short sale verbally approved if you want a quick transaction. means the negotiating process is done and ready to sell quickly

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                  • #10
                    Originally posted by glock33 View Post
                    from what I've heard short sale is a nightmare. Especially if there are two mortgages from two different banks. I would say go for it only if you have a lot of patience, otherwise stay away.
                    +1......

                    I ran into this myself.......went for almost 9 months....one bank signed off right away, the other refused to budge.......it finally fell all the way through......

                    The joke is going to be on the bank now though.......the loc was burged, and 20K+ worth of appliances where stolen, and more than a little bit of vandalism done to the property......

                    The loc is now back on the market......at 20K less than I was willing to pay last year if they had only signed off on it......
                    The posts on this forum by this poster are of his personal opinion, and his personal opinion alone

                    "Politicians are like diapers. They need to be changed often and for the same reason"

                    "We fight not for glory; nor for wealth; nor honor, but only and alone we fight for freedom, which no good man surrenders but with his life"

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                    • #11
                      Originally posted by BaseballBabe View Post
                      I forgot to mention that my mom is a Realtor so she will mostly like help me find a home. I know she won't want her only child in a dump. I just thought I asked to see what and if anyone had experience buying a home via short sale.
                      If you are going to look at a short sale, see how many banks own notes on the property.....if there is only one bank, it should be a fairly straightforward process.....if two or more banks are in the mix, I would stay away from it......
                      The posts on this forum by this poster are of his personal opinion, and his personal opinion alone

                      "Politicians are like diapers. They need to be changed often and for the same reason"

                      "We fight not for glory; nor for wealth; nor honor, but only and alone we fight for freedom, which no good man surrenders but with his life"

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                      • #12
                        You gotta have cash up front to buy anything at an auction.. the only deals are at absolute auctions. Picked up a condo that was selling for 400K 2 years ago for 75K last year.. the entire complex was foreclosed on and the bank auctioned off all the units. They're already going for 175K now.

                        Short sales are a pain. Home was appraised for 1.2mil.. it was in short sale.... he built it himself less than 3 years ago with cash and then took out a mortgage.. bank only gave him 80% of the value.. he couldn't pay so he was hoping to sell for more than the loan and walk away... he tried for a year with no luck.. ended up picking it up for 525K. It took 5 months of back and forth... during the process the owner stripped the place of all the appliances.

                        It will take 5 years for the home to pick its value back up, but it will be worth the wait.

                        I say go for it if you have the proper help and the patience. The market is still ripe with deals and most investors have slowed because their money is still tied up.

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                        • #13
                          My in-laws were looking to buy a short sale for their mother. It was going to be a cash deal. The house had a first and second mortgage. The holder of the second mortgage was owned by the holder of the first mortgage. The house owner and the holder of the first mortgage accepted the offer rather quickly. After four months waiting to hear back from the second the in-laws moved on. They found another house and bought it. The holder of the second finally accepted the offer three months after the contract expired. The house is still for sale and the prices have dropped another $20k, so the bank is taking a bath on that deal.
                          But when a long train of abuses and usurpations, pursuing invariably the same object, evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new guards for their future security.

                          For the intelectually challenged: If the government screws the people enough, it is the right and responsibility of the people to revolt and form a new government.

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                          • #14
                            Ok seeing how I sell homes in the OC/LA area I will keep this simple. find out if the short sale home is a pre-approved short sale by the bank. If so you can do it in about 3 months. A regular sale should be done in about 30 days. As listed above a REO is a good option. The question is since you get a short sale home at a better price are you willling to waite for the bank to answer.

                            The people who waited 9+ months on a short sale......sorry your realtor sucked. He should have got a right to represent all parties involved form signed and sent to the bank. Then he could have talked to the bank and he needs to stay on them every few days, this is why alot of realtors do not like to do them. In the begginning they were harder to do then they are now. Since your mother is a realtor she should be familiar with this and be willing to help out.

                            Also there are usually no repairs done on short sales as the seller has no money and the bank is ****ed off they are losing money.
                            Budda sat in front of a wall and when he stood up he was enlightened. I sat in front of a wall and when I stood up the wall was enlightened.


                            We forge our skills in the fire of our will.

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                            • #15
                              Sorry I forgot to tell you about auctions, in general they suck.

                              The people putting on the auction can legally bid against you then if they do not get a price they want they can put it back on the market. for example:
                              If there is a $5,000 reserve on the house, they can start the bidding but if the house stops bidding at $25,000 they can legally have a person in the audiance (working for them) out bid you and then they can put the house back on the market. They were busted for doing this by Dateline or 20/20 a while back.
                              Budda sat in front of a wall and when he stood up he was enlightened. I sat in front of a wall and when I stood up the wall was enlightened.


                              We forge our skills in the fire of our will.

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