# Short Sales



## Nomad (Dec 19, 2002)

I've come across a few places that are short sales. The only thing I know about those are they take time according to what I've seen on TV. Does anyone have any experience with them? Also, do you have to pay the asking price or can you make an offer? I'd ask my Realtor, but so far she has been about as helpful as a screen door in a submarine. Thanks.

Nomad


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## PaulNKS (Jan 11, 2009)

You can basically do what you want. In a short sale, the lien holder may have final say on how much the seller can accept, depending on the short sale agreement between the lender and the seller.

Offer what you want. Just like with any real estate sale, they will accept it, reject it, or counter.


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## lonelyfarmgirl (Feb 6, 2005)

I sold a house by short sale. It wasn't any different than selling a house the 'long' way. It went on the market for short sale, somebody made a cash offer, it was accepted, we closed in a couple weeks, and it was done.


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## Bluesgal (Jun 17, 2011)

I bought a short sale in 2010. You can't say that one should be over or under the "asking price". Sometimes the asking price is lower than market value because the selling agent wants to gernerate activity. Sometimes it is over market value, because the homeowner just wants to say they tried to short sell it but don't really want to.

My house was actualy listed for $20K UNDER market value. My offer was above the asking but by $7,500. The homeowner agreed to the price and signed back the offer. 

Two months later they bank responded that they wanted $10K over my offer. At that point I couldn've walked away or agreed to it. I agreed to it and the appraisal still came in over what I paid for it. 

The key is knowing what it is currently worth in TODAY's market and what you are willing to pay for it.

I should add that I had offers in on a number of short sales. Some came back from the bank at more than I wanted to pay for the property.. so I walked on to the next deal. It is a little frustrating (OK alot frustrating), but if you stick to what you truly want and the numbers it can be done. 

Also, make sure that your agent knows about short sales and the local market.

I'd also add that if you say that about your agent.. you need a new one. Did you sign a buyer's agreement with the agent?


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## Nomad (Dec 19, 2002)

Very interesting. Maybe since I'm using a VA loan a short sale isn't for me because I have to pay for the inspection and if the sale doesn't work out, I'd have to do it again on the next house I find. I wouldn't want to waste money.

Nomad


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## Bluesgal (Jun 17, 2011)

VA loans are great. Anyone who buys a house should have an inspection (not just because the VA or lender requires it).

However, in a short sales you don't do the inspection until _AFTER_ the bank agrees with the price. 

It works like this:


You make the offer
Homeowner countersigns the offer (OK, there may be some counters before this )
House is now "under contract" and the offer is submitted to the bank (you can still walk)
Some agents take back up offers in case you walk away while the bank is "pondering" the offer.
For you everything is on hold because until the bank comes back with approval of the offer or a counter there really isn't a deal.
None of the time frames (inspection closing etc) are in effect yet
Bank comes back with an answer, either a counter offer or an acceptance
If the bank countered then you can agree, counter the offer or walk away
You come to a "meeting of the minds" with the bank and agree and on a number..
The clock is now ticking... most likely you will have given yourself 10 days to get the inspection done..
The 10 days start from when you have an accepted agreement from BOTH the homeowner AND the bank.
Inspection completed to your satisfaction
Finish the paperwork and close the deal!
You now own the property
therefore, you wouldn't be doing inspections until you knew the bank agreed. I will warn you that most of the short sales are "as is" though so if you find something in the inspection, the sellers are not likely to fix it. You could however still "walk" from the deal.

At one point I had 3 short sale houses under contract, the one that came in first was the one I really wanted so I then "canceled" the other 2 deals. Some might not see that as fair but it was the only way in this market.


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## Nomad (Dec 19, 2002)

Bluesgal said:


> VA loans are great. Anyone who buys a house should have an inspection (not just because the VA or lender requires it).
> 
> However, in a short sales you don't do the inspection until _AFTER_ the bank agrees with the price.
> 
> ...


That's good to know. Then I guess we will continue to look at those type of houses.

Nomad


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## Bluesgal (Jun 17, 2011)

and from you've said about your agent.. get a new one


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## ChristieAcres (Apr 11, 2009)

Nomad said:


> I've come across a few places that are short sales. The only thing I know about those are they take time according to what I've seen on TV. Does anyone have any experience with them? Also, do you have to pay the asking price or can you make an offer? I'd ask my Realtor, but so far she has been about as helpful as a screen door in a submarine. Thanks.
> 
> Nomad


RE Managing Broker here- Get a new Agent who wants to work on your behalf! One that believes his/her paycheck isn't earned until you get a great deal on a home.

+1 about everything Bluesgal wrote. I'd only add that there needs to be a contingency in your offer for approval on your inspection. This can be written in on "as is" homes, too. This guarantees you get your Earnest Money back if you cancel your offer after the initial Home *Inspection*. Now, the VA Loan requires a VA Appraisal Inspection (I bolded Inspection for a reason). This allows you another out, if something else major comes up. 

Most Short Sales don't qualify for VA Loans unless "work" is done. That usually means the buyer (s) get to pay for and complete work prior to Closing. Rarely will banks step up to the plate. 

Often there are "bank approved sales prices" on most of the short sales here. That doesn't mean they won't accept less. You offer less, they can counter, simple.

I offer any price my Buyer's want me to, write in contingencies to protect their Ernest Money, also deny the bank accepting any other offers until responding to the one I present (with a deadline for approval). This has worked every time, as they want serious buyers and want the homes sold! It took a bit of negotiating on my last transaction, due to the Sellers wanting to get more offers to present. I simply pointed out to them, that if they did that, my Buyers would start making offers on other homes, then simply rescind when they found one who would agree. Yes, this worked.


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## rickfrosty (Jun 19, 2008)

Bluesgal said:


> I bought a short sale in 2010.
> *I should add that I had offers in on a number of short sales*. Some came back from the bank at more than I wanted to pay for the property.. so I walked on to the next deal. It is a little frustrating (OK alot frustrating), but if you stick to what you truly want and the numbers it can be done.
> 
> Also, make sure that your agent knows about short sales and the local market.
> ...


Just curious - you had others offers in at the same time ? If so what protected you from more than one offer being accepted ?


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## Bluesgal (Jun 17, 2011)

rickfrosty said:


> Just curious - you had others offers in at the same time ? If so what protected you from more than one offer being accepted ?


 
Well nothing except time. The likelyhood of all 3 offers coming back on the same day were slim to none as the contracts were signed over 6 weeks apart (one at the end of April, one in the middle of May and one in early June). 

I had had other offers come back and the bank ALWAYS countered with a higher $$ so the chances of a bank coming back with a straight acceptance was very low. I ended up walking away from 3 houses because the banks counter was too high (in my mind).

To cover myself I made sure that I had written cancellations that were sent and confirmed on the other offers immediately and had 24 hours to respond to the bank in my deal.


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## equinecpa (Mar 21, 2011)

Listen to all that has been posted above -all very good advice.

I thought I'd chip in with my experience. I'm in the final stages of a short sale purchase (hopefully the final stages -still haven't closed yet).

What I have learned along the way:

Be patient (I knew that going in)

Be sure you have a good agent (a buyers agent familiar with short sales who is going to work for you is a must)

Be sure that you have all the sellers lenders approval before proceeding with inspections etc. We weren't aware that we were awaiting a 2nd approval and proceeded with septic, well and house inspection before we realized we had to wait for another lenders approval. We did get that lenders approval (about a month later) but this could have been a lot of money wasted had they not approved the short sale.

Use phone and email to communicate with realtor/lendors -a phone call often gets acted on more quickly, but an email confirms in writing your intent. Phone calls can get misconstrued. My lender locked my rate without my asking. He said he wouldn't have acted without my permission but he did. After that I said look for any instructions from me in writing. 

Make sure your offer can be withdrawn if it hasn't been accepted -this gives you the flexibility to proceed on other properties if you desire. And like LorieChristie said have it written in that they can only look at back-up offers after responding to yours.

Find out if the property is scheduled for foreclosure. The property we are buying is supposed to foreclose on the 12th of this month so we are really really hoping we have everything done by then. Our realtor assures us we can get this extended-I'm really hoping this is the case but will be nervous until we close.

When making your offer base your offer on what you think the property is worth not on the price. The only caveat here is if you think the property is well priced you probably don't want to really low ball as some banks won't counter. Really do your homework here by pulling up comparative sales in the area. The property we are purchasing was first offered as a short sale at a price over $100k more than what we offered. They had dropped the price over about a year and finally was in our ball park, we offered 13K less than what was being asked and our offer was accepted. Also keep in mind that since this is a short sale there most likely won't be wiggle room in the contract for items arising out of the inspection. In our case there is a leaky shut-off valve in the plumbing, we will have to foot the repair where normally we would have asked the vendor for an allowance.

And since we are in a homesteading forum it's likely you'll be purchasing a rural property. While you are awaiting short sale approval you can research things like zoning, get copies of plots, surveys etc and make sure everything is in order so that once you do get approval you can proceed with inspections. We had some zoning questions and it was surprising how long it took to get our issues resolved.

Good luck!


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