Has anyone bought a short sale?

[imojoebunny]

If you have, how did it go. We are looking at a house that is currently a rental (has tenants in both parts, though it is not a true duplex, just has a basement suite). It is priced $150K less than the people paid for it 7 years ago, we would probably offer $175K less.

Anyone have any experience with this? How did it go for you? Did it take a while to get the bank to agree? What are the pitfalls? We would keep our current house until we closed and/or the tenants lease was up.

[saraandmichael]

we did. it was a long, stressful process for us. we were the first people to put a bid on the house, so we had to wait about six months for the bank to come back with their low price (which was higher than our offer).

we accepted their price, and it took about four more months to hear back from them that we were under contract.

at that point, they wanted to close in 15 days.

i believe the pitfalls speak for themselves in the wait times.

for us, it was difficult to get our loan package together on such short notice and we had a terrible time with the lender we were going through. at the end of the day we ended up doing a cash transaction and taking a mortgage out on it one year later.

[imojoebunny]

Jul 8, 2012 21:35:46 GMT -5 saraandmichael said:

we did. it was a long, stressful process for us. we were the first people to put a bid on the house, so we had to wait about six months for the bank to come back with their low price (which was higher than our offer).

we accepted their price, and it took about four more months to hear back from them that we were under contract. Good to know

at that point, they wanted to close in 15 days. Yikes, it is "as is" and "no disclosure", but I still thought we would have time to know what we are buying by getting the appropriate inspectors out

i believe the pitfalls speak for themselves in the wait times. I don't mind waiting. It is not far from our current home, so it won't change our day to day life much to move. I can see it being unnerving to be in limbo though and I would like to sell my current house in the spring or summer.

[sillygoosegirl]

We are in the process of buying a short sale. The sellers agreed to our offer over 2 months ago and now we are just waiting on the bank. There is simply no telling how long the bank will take. There is only one mortgage, so theoretically it will go faster than many short sales where there are multiple mortgages owned by multiple banks. But this one bank still has to agree to take at least a $100K loss, maybe much more (the home last sold 14 years ago for a bit less than we are paying, but was clearly refinanced during the boom and a lot of money taken out). We have heard nothing during this time. I've checked in with our agent a few times, but generally the bank has nothing to say until they get around to sending out an appraiser, which can take months. The wait is difficult, especially because there is no way to know if the bank ever will accept our offer, and even if they do, once we get the inspection we may find out we waited all this time for nothing. So that's the bad.

The good things are: (1) We will be getting the house for probably 20% less than similar properties in the neighborhood. (2) We really like this particular house and this is how it is being sold. (3) We are under absolutely no obligation during this wait time. If something we like better comes on the market before we hear from the bank (or we just change our minds), we can withdraw our offer with no penalty. (4) No other offer can go to the bank ahead of ours. Part of our contract with the owners says that they will not submit any other offers to the bank unless we walk away. (And the owners have no reason to break this contract since they aren't getting any money from the sale regardless.) So we don't have to worry about another offer for $500 more coming in at the 11th hour and keeping us from getting the house.

[imojoebunny]

Thanks Silly Goose. Keep it coming, it is all good to know. We have a realtor, but I have not talked to him yet.

There is a long back story, but I want to make darn sure this is really a house we are willing to go after before I bring him in. I have a lot of patience, and I don't want to waste his time, until we are sure we need him.

[LoveTrains]

I am also trying to buy a short sale. The seller accepted our offer two weeks ago. We are waiting on the seller's bank to get back to us. If we hear nothing in 60 days we can cancel the contract.

We had been looking for a home for a while, and this is by far the best one for the best price in our target neighborhood. If we get it for our offer it will be about 15% less than comps in the neighborhood. Our offer was $45K less than asking - and that was after a $25K reduction by the seller.

The problem for the seller is that the house is somewhat over improved for the neighborhood, though, so IMO his original asking price wa totally unrealistic.

So our seller has a short sale negotiator, and we were informed that the bank has assigned a negotiator to the case as well. Supposedly that is a good sign. Our seller also only had one loan on the property.

The thing that sucks is the uncertainty of the timing. It would suck to wait for six months and have the bank reject our offer or demand $20K more for the house. Also we don't do the inspection until after we hear back from the bank, but the house is sold as-is, so my understanding is that if major issues come up at inspection there is no negotiating credits or repairs for the issues.