Short sales

[Dobela]

In another thread I read how at least one person tried to sell their house by short sale and the bank didn't approve it. Can someone explain to me how it worked from the seller's side? When we were house hunting last year we fell in love with a house that was a short sale. We were told that the bank approved of the house being sold that way. The listing price was fair and we offered the listing price. The seller approved our price and our 'as-is, where is' condition. After waiting something like 45 days the bank first approved the contract then changed their mind saying the owner didn't qualify for a short sale and they rejected our contract. The owner has since taken the house off the market and it is just sitting waiting for foreclosure months later. We made an offer privately but since he doesn't want to (or maybe doesn't have the money to) pay any of his closing costs he decided to let it foreclose and refused private offers.

 

Since then we have bought another house and we have heard several real estate agents saying that they will never work another short sale again unless desperate. Foreclosures ok, short sales no. I know that our waiting forever for the bank top respond turned us off any other short sales and our agent even told us he didn't want to deal with one again.

 

Is this typical for short sales?

[Alyce]

I guess they are a way of making the seller feel better but the banks really don't want to do them. Usually the price for the short sale is much lower and the bank wants the house to foreclose. In many of these situations the bank knows and does end up making more money auctioning the house off or selling it themselves than they would have with a short sale so that is why they make everything so slow etc. They want the seller or the buyer to get tired of waiting so they can proceed with the foreclosure. Banks are still out for the profit. Nothing has changed.

[catalinakel]

We just short sold our house and, no, this was not how things went down for us. But we have a very smart realtor and she is doing shortsales all the time now. I do not think our house went into the MLS until we were approved by our bank to short sell.

[scrappyhappymama]

I think it varies A LOT. If I were going to buy a short sale, I'd definitely want a realtor who has lots of experience in short sales and can substantiate the number of sales they've brought to completion.

 

We considered a few short sales when we were house shopping last year, but decided the uncertainty was not worth it. We did put in an offer on a house that was in pre-forclosure. It was two weeks prior to the auction date, and the selling realtor told us we'd have to bid quickly if we were interested. It was priced well below market, so we didn't even try to haggle and offered the asking price. The selling agent came back and said we needed to put down significantly more earnest money, since the auction date was so close. So we did. And then they rejected our offer. :glare: The bank decided they would rather take their chances at auction, than take our offer at selling price.

 

Well, the house didn't sell at auction. We took a few months off house hunting, and when we returned to looking again, it was still on the market. We bought another home, one that ultimately is much better suited to us, so it worked out well for us. But I just checked and yep, that house is still on the market. It was in December of 2009 we put the offer in on the house. Stupid bank.

[mlktwins]

We recently bought a short sale. What a long and stressful process. We had a signed contract on 12/10/09 and didn't close on it until 9/2/10. We almost lost it a few times and had to up our price to get it, but we still payed under what it is currently assessed at. We didn't need to be out of our house and we didn't find anything we wanted more (we kept looking and could have gotten out of the contract at any time) so we hung in there. It was a complicated process made more complicated by the fact there were 2 lenders wanting their money. We are staying put for a long time now, but I would NEVER do a short sale again.

[Mosaicmind]

We considered short selling our home since it has now been on the market for a year and half but after talking with our realtor, a mortgage broker, and two people who have bought and sold this way we decided against it. It would ding our credit and we couldn't afford to do that. Plus our mortgage company changed hands again and they said that they most times don't approve these and sometimes you don't find this out until weeks before signing. It's too much of a risk for us to take right now.

[K-FL]

We closed as the "seller" a year ago on a short. It was a very long process! We were more like tenants than sellers since the bank made all the decisions as to price, etc. It took months for the bank to counter any offer and to get it all to the table. We had to hire an attorney to stall the foreclosure while the bank was dragging it's feet.

 

Why we did it? In FL, they can not come after you for the balance you were "forgiven" (even though the bank didn't lose since we had PMI.) We also won't be taxed on that $$. Our credit? In the tank anyway so it didn't make any difference by that point.

[Scuff]

My sister's short sale went like that. Bank drug it's feet and eventually didn't approve it. I've heard that FHA mortgages, the bank doesn't loose anything, since the gov't backs it. So in her case the bank had nothing to gain by approving a SS. It was in there interest to forclose. I would guess that with a regular mortgage they'd like the $ over a house they'd have to sell themselves. My MIL put an offer in on a short sale house. The bank eventually approved the offer (after first turning it down) but she had already found something else she liked more.