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what is a short sale whats good and whats bad in it for byers

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August 21 2012 - Town of Hempstead
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Profile picture for wetdawgs
Because the bank is losing money on a short sale,  and would prefer to lose as little as possible, they take a long time to attempt to minimize their losses.
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August 24 2012
Profile picture for 1julieann

whywill it take so long to get an answer back from the bank?

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August 24 2012
In our market, almost all properties are short sale homes.  Which makes it an inevitable option if you need to buy a home today.  Get yourself informed as much as you can, to avoid surprises.  Be prepared for properties that are less than pristine condition, because, after all, you're buying a home that someone is losing.

If you expect to buy short sales to get below market price, think again.  The landscape has changed because there are more buyers than there are properties listed on the market.

Good luck.
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August 24 2012
One thing I didn't see here. Laws are different in every State as well. There are some states Bank are more favorable to do short-sales then in other state.

Over all, here in California, almost 40% of the listing are short-sales. Like it or not you're going to have to work with them.
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August 24 2012
You can't stay clear of short sales in this market.  But I would stay clear of listing agents who clearly are clueless from the get-go.  Ask questions about the process, their experience and their impression of the lender(s).  The most important thing is to have an offer that can be justified by a BPO.  Even if your offer is a good offer, if it can't be justified than it might be a long way for them to let the market time prove the price.

Also I would not recommend an inspection or financing until you get approval from all lenders.
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August 24 2012
Agree with the above answer for most buyers to stay clear of short sales, unless they are an investor.
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August 24 2012
A short sale is the sale of property where they bank will accept less than what is owed as a purchase price.

The good part for buyers is a chance to purchase a property for a fair market value (or less), instead of an inflated value. The homes are also in better condition than many foreclosed homes.

Waiting for answers from the bank or their representative can and usually does take months. Many banks will not stop foreclosure proceedings even though you are negotiating with them.

In the majority of these sales, the buyer must be ready and able to purchase with no contingencies, at the time the offer is presented (pre-approval letter or proof of funds must also accompany the offer).



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August 21 2012
Based on my personal experience trying to buy properties on short sale, and as a real estate agent, I now advise my buyer clients to stay away from short sales.  Risks to the buyer include:
1. Property may be foreclosed upon prior to settlement, in which case the buyer's contract is void (although the buyer will get his or her deposit back).
2. Approval of the short sale by the seller's lender may take several weeks or months.
3. Lenders usually don't approve a short sale unless the seller proves he or she is incapable of paying the full amount of the loan balance due to illness, relocation, unemployment or some other hardship. The fact that the property has declined in value is not sufficient for the lender to approve the short sale.
4. Lender may approve short sale only if the seller agrees to sign a new promissory note agreeing to pay the remaining amount due on the mortgage over a specified number of years; if the seller refuses, the buyer's contract is void (although the buyer will get his or her deposit back).
5. If the seller's mortgage is insured, the mortgage insurance company may have additional requirements for approval of the short sale, which may take additional weeks or months.
6. Even if the seller's lender approves the short sale, the seller may not have any money to pay for repairs of defects that are found on the home inspection, or that arise after that and before the settlement.  Seller may not have money to pay overdue amounts of condo fees or homeowner association fees; often the lender will not pay these either, so the buyer may have to pay them even if not part of the original contract to buy the home.
7. Buyer may have locked in a mortgage rate for x days, but the seller's lender takes longer to approve the sale, in which case the interest rate on the buyer's mortgage may have gone up.
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August 21 2012

Visit my website for Short-Sale information.  Your question requires far amore space and time to discuss all the benefits and drawbacks for buyers.  In a nutshell, Short Sale is when the seller is requesting their lender accept less than what they owe on the note.  Example: Paid $550,000 in 2006, property is worth $325,000 today.  Bank will take a $225,000 loss + sale expenses.  it's a very complex transaction and requires very knowledgable people to handle the negoitation with the lender(s).
These are not always a good deal, but it may be the only way to get the house you like in this market.  Plan on waiting 3-6 months for the bank to approve/reply/deny.

 

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August 21 2012
 
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