Many of your have asked me about the good deals in buying a short sale. I say YES there are good deals to be had in purchasing short sales, but buyer beware! This is an extremely long process and may not lead to you buying the home of your dreams. Vivan S Toy from The New York Times wrote a great article The Roller-Coaster Ride Called a Short Sale. Here is her synopsis of the short sale process.
Short sales, however, are not for the faint-hearted. While there is a possibility for a good price, there is also a good chance that the deal will not go through. Many cooks are involved in this stew. The buyer must negotiate the price with both the seller and the seller’s lender. At the same time, the seller must negotiate with the lender on the terms for forgiving the amount still owed on the mortgage. Meanwhile the bank is negotiating fees for lawyers and brokers. The process can take six to nine months.
I closed my first my short sale January 2007 and my most recent was August 2010. Lots has changed in that time. Banks have streamlined the process and are now almost adequately staffed to handle the work load. But let me outline a short sale that did not go thru. Not for lack of initiative, but from the bank dragging their feet.
Listed a home July 14, 2009 at $174,900, did many price reductions and eventually got down to a list $148,900.
Late October 2009 received offer which the bank would have walked away with approximately $132000.
Early January 2010 finally heard from bank after many calls, our offer was not sufficient. The buyer did not want to come up in price so she walked from the purchase.
End of January 2010 received another offer and submitted it to the bank. We were coming to the end of the redemption period for the sellers to get their home sold. The bank was not moving this file along and eventually the home was foreclosed upon and the bank took over ownership.
The home is currently listed for $120,900. Remember the bank could have gotten $132,000 with the offer from last fall.
