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Answers (11)
- Johnny James, "Palmdale Mortgage"
- Contributions:406
short sale means the offer is less than the balance of the mortgage
- Joelie Quezada, "joelieq"
- Contributions:10
IF YOUR NOT IN A HURRY THEN MAKE AN OFFER AND INCLUDE PRE QUAILIFICATION LETTER, PROOF OF FUNDS AND FICO SCORE. THE RASON FOR PROPERTY STILL BEING ON THE MARKET IS BECAUSE THE BUYERS ARE NOT AROUND WHEN THE BANK FINALLY MAKES A DICISION DUE TO THE FACT THAT IT TAKES 90 DAYS AND LONGER. YOU REALLY SHOULD HAVE A AGENT REPERSENT YOU WHEN MAKING AN OFFER ON A SHORT SALE.
- Rob Peterson, "OC Home Talk"
- Contributions:19
- Tim Kunze, "TimKunze"
- Contributions:61
j,
I'm speaking as a Huntington Beach Realtor(r). The way I explained it is how things work here in Huntington Beach, Orange County, California!
I'm speaking as a Huntington Beach Realtor(r). The way I explained it is how things work here in Huntington Beach, Orange County, California!
- Randy Hooker, "GoingForIt"
- Contributions:395
lincma,
Beware of agents in other states giving you legal and/or contractual advice on this forum. Real estate is local. What goes down in VA does not necessarily go down in CA. Best advice is for you to secure the services of a LOCAL, experienced, reputable Buyer's Agent/Realtor that can assist and counsel you throughout the entire process.
Best of luck!
...randy
Beware of agents in other states giving you legal and/or contractual advice on this forum. Real estate is local. What goes down in VA does not necessarily go down in CA. Best advice is for you to secure the services of a LOCAL, experienced, reputable Buyer's Agent/Realtor that can assist and counsel you throughout the entire process.
Best of luck!
...randy
- Jeff Konstant, "jkonstant"
- Contributions:1970
Tim:
In many places it is common to leave the good faith deposit with the buyer's broker and in others the listing broker. Escrow handling deposit rules vary and a broker may be required to actually deposit the funds prior to acceptance. Since refunding of this money cannot be done without all parties agreeing in writing, it is better to defer the escrow/down payment/good faith deposit until the seller's lender has provided written approval to the buyer. I have witnessed seller's vanishing into the night and brokers legally unable to refund the money without a court order. I am also familiar with other instances where the buyer has terminated a contract within the legal scope of it and the seller refuses to sign a release.
In many places it is common to leave the good faith deposit with the buyer's broker and in others the listing broker. Escrow handling deposit rules vary and a broker may be required to actually deposit the funds prior to acceptance. Since refunding of this money cannot be done without all parties agreeing in writing, it is better to defer the escrow/down payment/good faith deposit until the seller's lender has provided written approval to the buyer. I have witnessed seller's vanishing into the night and brokers legally unable to refund the money without a court order. I am also familiar with other instances where the buyer has terminated a contract within the legal scope of it and the seller refuses to sign a release.
- Tim Kunze, "TimKunze"
- Contributions:61
You've received some pretty good definitions of Short Sales, also know as short pays from the bank's point of view. I don't understand part of the initial answer concerning not releasing earnest money. The buyer's agent should not release the deposit check until escrow is opened. Escrow isn't opened until you have an accepted offer. In a short sale, the offer is not accepted and escrow is not opened until the bank has put its stamp of approval on the offer.
As far as the 30 day issue, that can be a green flag in one way in that the bank doesn't want a foreclosure property on their books any longer than is absolutely necessary. After 30 days, they're more likely to cut a deal to get it off their books. On the other hand, it can be a red (maybe just yellow) flag regarding condition. This is especially true if it's fallen out of escrow a number of times.
I've done a number of short sales and a few have actually gone rather smoothly. Be prepared to wait up to three months, though, before the bank responds to the initial offer.
Hope that helps.
As far as the 30 day issue, that can be a green flag in one way in that the bank doesn't want a foreclosure property on their books any longer than is absolutely necessary. After 30 days, they're more likely to cut a deal to get it off their books. On the other hand, it can be a red (maybe just yellow) flag regarding condition. This is especially true if it's fallen out of escrow a number of times.
I've done a number of short sales and a few have actually gone rather smoothly. Be prepared to wait up to three months, though, before the bank responds to the initial offer.
Hope that helps.
- Johnny James, "johnnyloans1"
- Contributions:115
okay you have short sale or short pay defined in previous posts and since no one answered the second part of your qustion directly no a house listed for 30 days should not be a red flag.
- Craig Yeager, "yeagersells"
- Contributions:51
A short sale is when the seller owes more than what the property is currently worth and asking the lien holders to forgive the debt that they are short on. An example: Let's say a property is worth 400,000 in this current market but the sellers bought it 3 years ago for 500,000. If the sellers got it into contract for 400,000 they would be asking the lenders to forgive the approximate 100,000 debt.
These deals can take anywhere from 45-90 days sometimes as long as the price is realistic and the listing has been aproved by an agent experienced in this complex transaction. It also depends where they are at in the process. Once an offer is chosen it is submitted to the bank for their approval. So everything is contingent on the banks decision.
Keep in mind a lot of these listings are grossly underpriced and completely unrealistic and usually if its too good to be true it usually is. You can still get a property at a good deal but some are just way underpriced.
Some agents are grossly underpricing them trying to get a bidding war going on so they can get the price inflated through a bidding process with multiple offers and a lot of times they have been sent to the bank when they are still rediculously underpriced offers. Then the bank will counter a large amount back and then the deal cannot be done.
I wouldnt stear away from these since you can still get a good deal and there's a large amount of short sales in our market today. Keep in mind when putting an offer in always base your offer off of recent sold comparable properties not the list price (unless its priced right) and be willing to hold out while you're continuing to look around.
I do a lot of these deals and they are being done there's just a lot more home work involved and not to mention time. So you can get a good deal and I do think you should definitly try on short sales. If not you're missing out on way too many properties.
Good luck!
- Linda Rozales, "Lrozales"
- Contributions:245
As a first-time homebuyer, the best thing to do is to hire your own buyer's agent who is very knowledgeable with real estate and the current market. We do have an entirely different market right now and education is very important in buying a home. In a short sale listing the # of days that the property sat on the market is not relevant. There are currently 3 types of listings right now and they are:
1) Short Sale - wherein the homeowner is still signing all the contracts but has no say on the price. The homeowner will need to get the lender's approval to sell his/her home for less than what is owed but the lender will have to approve the price after getting a what you call BPO (Broker's Price Opinion) that is done by another real estate agent that is hired by the bank. A loan that is owned by one or two lenders for a home does not mean that there are only two sets of people approving the short sale. Majority of the time, one loan is owned by 3 or more investors overseas and it takes a long time to get just one loan approved. This is the reason why a short sale listing sits on the market for a long time. As a BPO provider for the banks, when providing valuation I do provide a 30-120 day value for the home. The bank do know what the value could be after 120 days. When buying a short sale, never agree to put your deposit into escrow. Once the homeowner files for bankruptcy before close of escrow, you are doomed. It will take more months to get your escrow close cause you will need to hire a lawyer to have the house taken off of bankruptcy which is going to be tough.
2) Bank Owned or REO - this type of home already went through foreclosure and is now owned by the bank. The listing price that you see is already approved and because of multiple offers, the accepted offer often times is way above the listing price. However, there are quite a few appraisal issues. If the house appraised for less, your lender will not give you a loan for the price that you offered if the house appraised for less. Your agent will really need to do diligence to help you figure out what the market value would be for the house. Currently, banks are waiting for all the offers to come in before they would make a decision on which offer to accept. It is important that your agent is able to help you submit a solid offer.
3) Standard Sale - home is still owned by the homeowner and has equity. There are a lot of homeowners who are moving out of state, buying a bigger or smaller home, divorce, and a lot other reasons and they will make a decision within 3 days.
There are a lot more to learn and these are just a few of them.
1) Short Sale - wherein the homeowner is still signing all the contracts but has no say on the price. The homeowner will need to get the lender's approval to sell his/her home for less than what is owed but the lender will have to approve the price after getting a what you call BPO (Broker's Price Opinion) that is done by another real estate agent that is hired by the bank. A loan that is owned by one or two lenders for a home does not mean that there are only two sets of people approving the short sale. Majority of the time, one loan is owned by 3 or more investors overseas and it takes a long time to get just one loan approved. This is the reason why a short sale listing sits on the market for a long time. As a BPO provider for the banks, when providing valuation I do provide a 30-120 day value for the home. The bank do know what the value could be after 120 days. When buying a short sale, never agree to put your deposit into escrow. Once the homeowner files for bankruptcy before close of escrow, you are doomed. It will take more months to get your escrow close cause you will need to hire a lawyer to have the house taken off of bankruptcy which is going to be tough.
2) Bank Owned or REO - this type of home already went through foreclosure and is now owned by the bank. The listing price that you see is already approved and because of multiple offers, the accepted offer often times is way above the listing price. However, there are quite a few appraisal issues. If the house appraised for less, your lender will not give you a loan for the price that you offered if the house appraised for less. Your agent will really need to do diligence to help you figure out what the market value would be for the house. Currently, banks are waiting for all the offers to come in before they would make a decision on which offer to accept. It is important that your agent is able to help you submit a solid offer.
3) Standard Sale - home is still owned by the homeowner and has equity. There are a lot of homeowners who are moving out of state, buying a bigger or smaller home, divorce, and a lot other reasons and they will make a decision within 3 days.
There are a lot more to learn and these are just a few of them.
- Jeff Konstant, "jkonstant"
- Contributions:1970
In simple terms a short sale means the owner owes their lender more than the home is worth and is hoping the lender will forgive the difference between what is owed and an offer to purchase the home. The owner must also prvide proof of hardship to their lender to be considered.
As a buyer there are several things to consider. If a home is really worth $200K but the owners owe $400K, you are not likely to get it for $100K. The seller's lender will determine the cost to foreclose vs the loss in approving the short sale.
The process can take months and even then, the seller's lender can still say no. Worth considering if you are hoping to take advantage of the $8K first time buyer tax credit.
If you do decide to take the plunge, please consider the following...
1. Your offer (contract) should clearly state that you can terminate the contract at any time prior to receiving written approval from the sellers lender without any loss to you.
2. Any good faith deposit (escrow) money should be withheld until you receive written approval from the seller's ender. Not a dime to anybdy until then. Zero, nada, nil. Do not be talked into it. Agents fail to tell buyers that getting that money back requires the seller to agree in writing to it. Even if you are legally entitled to it, the seller must agree in writing. If they don't you could very well end up in court.
3. Any offer should consider whether the house will lose value in the months you may wait for an asnwer. You can specifically address this in the offer to gurantee you are actually receiving some equity on settlement day.
4. Get your fiancing in real order. Often the seller's lender, if they aprove the short sale will give you a very short time period to close or no deal.
Our offer on a short sale was accepted by the seller on Nov 8, 2008. The seller's lender finally approved it on March 17 2009 and gave us until March 27 to close. Ten days or no deal. My bank BofA and Wells Fargo told me they needed 30-45 days so I had to scramble and use a local mortgage broker to get it done in 10 days. He did.
As a buyer there are several things to consider. If a home is really worth $200K but the owners owe $400K, you are not likely to get it for $100K. The seller's lender will determine the cost to foreclose vs the loss in approving the short sale.
The process can take months and even then, the seller's lender can still say no. Worth considering if you are hoping to take advantage of the $8K first time buyer tax credit.
If you do decide to take the plunge, please consider the following...
1. Your offer (contract) should clearly state that you can terminate the contract at any time prior to receiving written approval from the sellers lender without any loss to you.
2. Any good faith deposit (escrow) money should be withheld until you receive written approval from the seller's ender. Not a dime to anybdy until then. Zero, nada, nil. Do not be talked into it. Agents fail to tell buyers that getting that money back requires the seller to agree in writing to it. Even if you are legally entitled to it, the seller must agree in writing. If they don't you could very well end up in court.
3. Any offer should consider whether the house will lose value in the months you may wait for an asnwer. You can specifically address this in the offer to gurantee you are actually receiving some equity on settlement day.
4. Get your fiancing in real order. Often the seller's lender, if they aprove the short sale will give you a very short time period to close or no deal.
Our offer on a short sale was accepted by the seller on Nov 8, 2008. The seller's lender finally approved it on March 17 2009 and gave us until March 27 to close. Ten days or no deal. My bank BofA and Wells Fargo told me they needed 30-45 days so I had to scramble and use a local mortgage broker to get it done in 10 days. He did.
Short Sale
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