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"Short Sale" condo

Bill4728

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My DD is (was) buying her first condo. She had an offer accepted on a condo which wasn't in foreclosure (yet). BUT it was a "short sale" which means she offered less than the person owed.

That was mid July and still nothing. Now with the bail-out, we are afraid that the bank would rather sell the bad loan to the feds instead of taking less than is owed.

Any comments?
 

Born2Travel

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Today's market :(

We are buying a second home that is scheduled to close next week. We previously made an offer on a short sale (twice) and it seems the banks are in no hurry to do anything which surprised me. As far as I know that house is still on the market (the bank decided to raise the price $25K after we made a full price offer (full price according to the listing) - you'd think they would have rather sold the house (that was in January) rather than hold it, but I guess not. Fortunately the house we are now buying was not bank owned, but I will not be sure it's really happening until after closing - today's market is really a mess. How do you even appraise a home today?
 

urple2

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My DD is (was) buying her first condo. She had an offer accepted on a condo which wasn't in foreclosure (yet). BUT it was a "short sale" which means she offered less than the person owed.

That was mid July and still nothing. Now with the bail-out, we are afraid that the bank would rather sell the bad loan to the feds instead of taking less than is owed.

Any comments?
Unless they are pre approved by the bank, it's a toss of a coin of whether it will go through... Florida is full of short sales. Cape Coral and Fort Myers come to mind but even the realtors there warn of whether you'll get that house you're trying to buy.
 

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It makes you wonder how anxious banks are to sell foreclosed homes, doesn't it? We have several in our neighborhood with no signs, etc. The bank also doesn't pay HOA fees. As a result, the homes quickly start looking like abandoned property with high weeds, etc. In Florida, this also creates mold problems fairly quickly. As a result, HOA's get stuck cutting the grass with little hope of any recovery of the costs because the banks loss is so great there's nothing left over from the sale for other creditors. It's a crazy problem, I've read each foreclosure reduces the value of surrounding houses 1%.
 

yan19454

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I plan to buy a house. But have no idea what the value of the house is.
 

Bill4728

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At this point, since prices in the greater Seattle area have declined about 10% over the last 2-3 months, I now feel that maybe she may have offered too much money. She sign an extention which expires in 14 days, so if it doesn't go thru by then, she may pull out.
 

klisow

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Short Sales are very tricky...and the bank does not need to do anything with them until they want too. Tell your daughter to consider other options if she is in need of getting into a home.

Our friends were in the exact same position last month. They had put an offer in on a short sale home in May and expected to have some response in a resonable amount of time. They were pre-approved and had already sold their home.

Their realtor kept calling and asking the other realtor if there was any information. At the end (August), the bank's realtor basically told our friends that the bank said to stop bothering them, they were being annoying, and they would get to the loan on their terms.

Our friends then found another home and put an offer in on that house and it was accepted. They called the bank and said they were pulling out of the short sale offer. Well the bank then responded with "we are just working on it now," and it will be ready within days. Our friends said that was alright...they could keep the house in their possesion, they would just buy the other one. Thank goodness the paperwork had a deadline in June, so they got their earnest money back.

I just don't understand why the banks do this. Woudln't they rather deal with a short sale rather than forclosure? It baffles me.
 

Passepartout

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I plan to buy a house. But have no idea what the value of the house is.
I'd get an independent appraiser's opinion. Expect to pay for it. One of the things that got the US into the mortgage mess was appraisers that worked for the lenders or RE agents who had a vested interest in making the value of the property 'match' the loan, rather than the loan reflecting the actual property value.

Good luck and best wishes.

Jim Ricks
 

Icarus

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I plan to buy a house. But have no idea what the value of the house is.
I hope there's a good sandwich place near that house, and you can remember where it is. :)

-David
 

silvib

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In theory it's quicker to close on a deal when it is bank owned as opposed to short sale or pre-foreclosure. We submitted a contract on a buyer's behalf earlier in the year to the listing agent of a short sale property and 3 months later we were still waiting to hear whether the offer was accepted or not.
The offer was withdrawn and we started over.
 

Teresa

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It makes you wonder how anxious banks are to sell foreclosed homes, doesn't it? We have several in our neighborhood with no signs, etc. The bank also doesn't pay HOA fees. As a result, the homes quickly start looking like abandoned property with high weeds, etc. In Florida, this also creates mold problems fairly quickly. As a result, HOA's get stuck cutting the grass with little hope of any recovery of the costs because the banks loss is so great there's nothing left over from the sale for other creditors. It's a crazy problem, I've read each foreclosure reduces the value of surrounding houses 1%.

Even though the bank doesn't pay the fees while it owns it, the fees should be adding up (with the proper penalties). The HOA should either foreclose or 'demand' payment if it gets far enough along (at least put a lien on it). When the property finally sells, the lien that the HOA put on the property should get paid before the bank (the owner) gets funds from the buyer.

If the property is actually in foreclosure (before the bank gets it back at the foreclosure hearing) then it seems that the HOA fees due while it's in foreclosure are 'forgotten' - at least in Florida. I don't think the clock stops on property taxes though (grin).

This is because when a property is in foreclosure it is in a sort of limbo without any 'real owner'. Just a bunch of liens on it. Once it gets foreclosed and the bank bids on it for the amount it is owed (or whatever it bids) then they become the owner and it's not in limbo anymore. So once there is a 'real owner' again (whether the bank or an individual) then the HOA fees are collectible again.
 

Beaglemom3

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I plan to buy a house. But have no idea what the value of the house is.
If you know a realtor, ask them to do a "comp" of like houses sold in the same area. Not an exact science, but gives you an idea.

I put a cash offer on a foreclosed 2 family in Belmont, Ma. I bid 15% lower than the bank's asking price. They accepted a full price offer from a buyer who had yet to be approved for a mortgage. My realtor, buyer's broker, did a comp for me.
 

LLW

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If you know a realtor, ask them to do a "comp" of like houses sold in the same area. Not an exact science, but gives you an idea.

I put a cash offer on a foreclosed 2 family in Belmont, Ma. I bid 15% lower than the bank's asking price. They accepted a full price offer from a buyer who had yet to be approved for a mortgage. My realtor, buyer's broker, did a comp for me.

The thing with realtors' comps is they are based on the past, whereas prices have been declining. And it is very likely that prices will continue to decline from their current levels. I would make sure that the comps incorporate the recent past declines, and anticipated future declines, before I would rely on them.
 

LLW

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At this point, since prices in the greater Seattle area have declined about 10% over the last 2-3 months, I now feel that maybe she may have offered too much money. She sign an extention which expires in 14 days, so if it doesn't go thru by then, she may pull out.
If it was a fair price when she offered it, for sure it is now over-priced. I would not sign another extension - she has every reason to pull out.

Sooner or later those short sale houses will have to be purchased on the market by somebody, regardless of whether the banks own them or the government. When there's a glut of them, and buyers are wary because of worries/problems over their jobs, investments, 401(k)s, costs of groceries and gasoline, there will be an over-supply of houses for sale and prices will go lower from current levels.

Unless she has a reason to be in a hurry, or she clearly runs into a house that's way under-priced, I would wait.
 

DeniseM

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I hope there's a good sandwich place near that house, and you can remember where it is. :)

-David
David, you are so bad! :rofl:
 

Born2Travel

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kliso said:
I just don't understand why the banks do this. Woudln't they rather deal with a short sale rather than forclosure? It baffles me.
This is what baffles me too... I've been told it costs them approx $50K to let it go into foreclousre - why don't they just accept the offer and be done with it? I don't think I will ever understand this. We were prequalified, excellent credit... and we gave them plenty of time - a month is long enough - but they chose to raise the price and keep holding onto the house which is worth much less at this point :shrug:
 
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Bill4728

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My DD bought a condo in Dec ( before the $8000 free money the fed is giving all new home buyers in 2009)

BUT we still were thinking about buying another house since the prices are so good and the interests rates are still so low. Again we found a short sale and last week made an offer. We now know to sit back and wait ( maybe a very long time) Yesterday we heard from the bank. If you can get a loan and close before May 8th the house is ours!! 10 days for the bank to respond to a short sale offer! That is about 10 times faster than we thought it would take.
 

Born2Travel

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That's very quick! - I think things have changed in the last year. Yes, this is a good time to buy - I'd like to buy another also, but I think we should sell one of the rentals first and we are not ready to do that yet. Oh, and the short sale we made two offers on last January is still on the market - they have lowered the price about $30K but about 11 months too late - we are happier with the purchase we made when we couldn't get the bank to move on the original choice. It bothers me that the house has now been sitting empty for about a year and a half, though... they could have sold it long ago.
 
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davhu1

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Some the owner put a short sale as leverage to negotiate down his existing loan and has no intentions of selling it. Find out if the bank has approved the short sale or not, and if the realtor does not even bother to pull any pictures up, chances are it may never sell and just disappear from the market. If you put an offer, make sure put an expiration date. I think bank owned has a better chance of a sale.
 
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