Has anyone ever made an offer on a short sale?

[Tiny]

At least they were upfront about the 120 days... I started the 'buying a short sale' in February of 2010 (put in a bid), got 'accepted' of sorts in April (went back and forth with various banks for a loan and if the short sale bank would accept that), spent 3 months providing nearly the same financial information over and over and over and over and finally closed on June 30th 2010.
Of course, on June 20th (2 days before my first closing date) I was informed the short sale-ing bank needed $600 more than my original bid and that the seller had no money to pay this so it was up to me to either pay it or no sale. It was still a good deal so I agreed to pay the $600.00. Then the short sale -ing bank dragged it's feet pushing my closing date off to the 25th... which caused my mortgage lender to ask me to provide 'more current' financial info for my loan... and then on the 25th the closing date got pushed to the 27th and then to the 30th - with yet another request for my most up to date financial information and then it finally closed on the 30th. I should have just paid cash (as in a brief case filled with it) versus going the mortgage route - but I really did want to take advantage of the low interest loan...

My advice would be to go ahead with the bid on the short sale - just don't expect a 'smooth ride', have alots of patience, have all your ducks in a row (for YOU not the bank - know that you really can afford the property and that it fits most of your criteria for a property) , and don't get emotionally involved with the whole transaction... in other words - if it falls thru after 100 days be able to shrugg your shoulders and say "oh well... let's move on" versus being anxious/angry/tied up in knots about the whole thing. There will be a just as good deal or a better deal just on the horizon! There always is.

[phil5185]

A friend buys some 'shorts' - yes, it takes about 120 days to close. The bank is responsible to their depositors/investors, so they can't just put a 'short' out for sale and grab the first offer, they have the fiduciary responsibility to make a 'best effort' to get the best available price. After the close, he puts his crews in the house for about 5 days, then lists it at about $10k under market to get a 3 week sale. Ie, from the time he closes, he tries to get his money back within a month, hopefully with a $10k to $25k profit - and then on to the next house - 12 'turns' per yr = <$200k profit.

BTW, shorts/foreclosures are not necessarily good deals. If you buy a so-called $150k house for $100k, you will spend much of the $50,000 of 'savings' to make the house equivalent to the same floorplan next door. The houses usually need a full set of appliances, counter tops, new carpet/flooring, paint in/out, new garage door openers, new ceiling fans, repair/replace toilets, new door knobs, new sinks, yada. Easy to spend $25k on the immediate upgrades.

[brdsl]

I don't like the amount of time it takes. All for them to say "no". I typically don't make offers on multiple different properties. I wait to see if one will pan out, then move on. I know it isn't probably the best way, but it is what I am comfortable with. So, waiting 90-120 days isn't good use for my 1k nor my missed opportunities.

But being you are in no hurry, and are moving into it...it might be a good opportunity for you.

[Plain Old Petunia]

My ex-husband tried to sell his house via a short-sale, this is his experience, as he told it to me:

After jumping through a lot of hoops, his lender agreed to let him do a short sale. They set the listing price, not him. The house was listed at 115k. Eventually, they had an offer of 115k which they accepted. A little while into the process, the lender decided they wanted 122k and the buyer agreed. The closing date approached, my ex-husband moved into a rental. Just before the closing date, the lender decided they would not take less than 133k and the buyer walked. The bank immediately put the house back on the market listed at 90k.

To the best of my knowledge, the house is still for sale. I don't know if they haven't had more offers, or if they won't accept the offers, or if they are jerking another buyer around, or what.

[Plain Old Petunia]

I just checked realtor.com. It is now listed at 88k.

[Sum Dum Gai]

We bought our place as a short sale. The process was pretty smooth for us, but we were putting in offers in January and February to close in time for the tax credit in April. There weren't a lot of surprises or anything, it just takes forever. The selling bank would routinely take several weeks to get paperwork to the title company that in a normal transaction would take hours or one business day. The house we finally bought was the fifth short sale offer we had put in too. Three of the other four went to all cash buyers, and the fourth went to somebody putting 50% down. If the short sales are reasonably priced they tend to attract investors. At least in our area. Hard to compete with that when you need to carry a loan.

[hcj]

Yes, we made an offer on one last June. It closed escrow early Sept, so it's true what we're hearing about SS actually closing and closing faster.

A house that backed to the nature preserve and had a peak a boo ocean view came on the market listed at $340K. A smoking deal in this part of the world. Showed it to hubby that first day and despite the fact that we would be starting all over with a cosmetic fixer and all, it was too good to pass up.

Whoever was going to get this one, I knew it was going to be an all cash buyer, so hubby rounded up his uncle to put in an all cash offer for $350K. The negotiations went back and forth for about 10 days with our final and best at $405K plus we'd pay whatever the bank would accept us paying on the owner's alimony lien. There were offers as high as $525K with loan contingencies.

The realtor who got it outsmarted us and got if for exactly what we offered. When it came on the market I panicked and had a realtor I know put together the offer. Don't get me wrong, this realtor was great, but had I been thinking I would have had the listing agent represent us. Normally I would never do that, but on a smoking deal SS, it's the way to go if you want the house. Despite the fact that the realtor who bought it was an agent, she had the lsiting agent represent her with no comm to her or her broker.

Plus, we didn't think to have no inspection contingency. I know a lot of you would cringe at this, but essentially we had an inspection when our next door neighbor contractor went over it top to bottom while we were deciding how much we could manage to make our final and best.

Two weeks after it closed escrow she listed it for $575K and ALL she did was have the junk hauled away and the carpet cleaned. It took 3 months to sell and she got $549K.

I'm still kicking myself that I didnt think that first day to go straight to the listing agent. Plus, we would have had one more sweetener that miss agent didn't... being able to give him the listing on our house. From the day it came on the market to close of escrow was about 2 1/2 months. Granted, I think some of the shortness can be attributed to no loan or inspection contingencies

[hcj]

Hmmm. Has your realtor been able to confirm that it is listed on the MLS? On short sales NEVER EVER EVER deposit any money until you open escrow with a signed sales contract. I would not even consider giving $1,000 earnest deposit with an offer.

[hcj]

I've just heard of too many short sales going south and the buyers losing money from their deposit. I'm not saying you don't do an earnest deposit, I'm just saying that you don't do it until you have the signed agreements and you actually open escrow.

[2kids10horses]

I tried to buy a shortsale, and the bank didn't take it, even though it was a "full price" offer. The agent would lower the listing price each week to generate an offer. Once he got the offer, he then tried to sell it to the bank.

I got tired of waiting it out, and got my earnest money back, then went and bought a foreclosure and closed in two weeks.

I don't really blame the banks. They really are, as Phil noted, trying to get as much as they can out of their bad loan. Once they own the place as a foreclosure, they become more desparate to sell it.

[8 Bit WWBG]

...:::"we would have to get pre-approved through a specific mortgage company (I'm already pre-approved somewhere else), agree to wait 120 days for the bank to make a decision, and we have to give a $1k emd.":::...

I watched some friends go this route, and yes they got dragged on for a few months before the bank said "we think we can get $2k more". They are screwing with you, which is why like Phil said, DON'T get emotionally attached to the house. Let them hold it for a few more months, and your offer will seem much more reasonable.

[AgeOfEnlightenmentSCP]

Cash is king. The vast majority of short sales fall through due to financing- as do the vast majority of real estate deals of any type. Some fall through because banks are flaky. It's not a short sale until it's approved. Many realtors are marketing short sales that are really just "proposals" to do a short sale. They do not have a firm commitment from the lenders. I have been involved in short sales- in fact, I'm considering one now-- the key is patience, because honestly...I think 120 days is optimistic.

[AgeOfEnlightenmentSCP]

patstab- why would you offer a penny over list when you're paying cash? We just closed on two REO's-- one in Pompano Beach listed for $89K that we offered $30K on-- they settled for $54K, we reduced the realtor's commission because while he had the listing we found it because I noticed it was abandoned, there was no signage or marketing. It wasn't even on the MLS yet. We told the bank and the HOA to go work it out, but we weren't going to pay dues for time we didn't own the property-- pure and simple. It's not our obligation.

All told, we saved $40K and change. I don't know how long it take you to earn $40K but we aren't independently wealthy over here, we negotiate for every penny we can get.

If we can't reach a deal, we just buy the next one. There's no shortage right now.

The other one we bought was in South Bend, IN and it was listed for $29K, but we paid $11K.

[naturallyfrugal]

We sold a house as a short sale (job required move and we couldn't rent it out for enough to cover monthly expenses) and it took from April to September to close. The buyers got a great deal ($1k over asking) and bought a move-in ready house, including appliances. We weren't bitter sellers trying to destroy the property, which may be the case for most short sales.

There were a lot of demands places on us and the buyers from the lender and we did have to come up with cash at closing, as well as pay a lot in taxes on the forgiven amount.

Not all short sales are the result of buying more house than you can afford, sometimes you need to move because of a job and because of the crappy market, have to short sale.