John wrote......The trick is with short sales is the bank just takes forever. Many never do close and end up being foreclosed on, for reasons that have nothing to do with the buyer. They are better than they where but still it is horrible. That is only one of the downsides. Another thing is that what is happening in a short sale is someone owns a property that they owe considerably more on it than what it is worth. They then advertise it for sale at what ever price they want, it really doesn't matter because it really isn't the sale price. Often they "price" may be really cheap to get someone on the hook. That is why they often look like such good deals. The bank will never let them go at those cheap prices.
Then they are going to go to the bank and ask them to forgive part of what they owe. Do you think the bank wants to do that? The only reason the bank even considers it is because technically in just the right situation the short sale could be cheaper for them than a foreclosure. What the bank tries to do is string the seller along getting them to make payments, as long as the seller is making payments they are never going to agree to a short sale. The bank makes the seller prove they just can not in anyway make the payments, job loss or what ever. They may try other tactics while you are on hold like temporarily restructuring the loan till they get back to work. If they are just trying to get out from under the upside down property so they can go get something else they will never do it. The seller has to crash there credit, be so far behind on payments that the bank is ready to foreclose. Then the bank will consider for them selves is it in there best interest to consider selling it to you at a loss rather then they take it through the foreclosure process. They are not afraid to do that it is just which one is the best math for them. They will then work on seeing how much they can get out of you. They are not going to sell it at a cheap price to you, They will want fair market value. They fight for the best price they can get. If they do entertain your offer they will respond with a counter offer that is higher than what you offered. If they do agree to the short sale it is because they can get more out of you than going ahead and foreclosing and selling it on the open market minus there expenses to do that. If they did approve the short sale, there are still many things that can derail it. A fellow agent spent months working through the whole process and negotiated with the bank an amout they agreed to. The problem was that the original purchase was done with less than 20% down so the loan had to have what is called PMI or private mortgage insurance on it. A significant number of loans are like that. The PMI insurer would not release the amount due to them. The agent tried everything, after more than 6 months at it the whole thing fell through because of it. The PMI insurer would not budge. You can do a short sale if you want, I will submit the offer but realise what you are in for. I just think there are plenty of good clean deals out there, why would you want to mess with a short sale?
Jerry responded......The selling agents were talking about bank approved short-sales, which they said would help close the deal - and they said you have to determine whether or not the bank is eager to let go of the property or if the property is fresh on the market. What do you think?
John wrote back.......Sure that is a fair response. I only want to do what is in your best interest. You are the decision maker, I am wanting to inform you.
There are more details I was trying keep it simpler. let me add more information. There is not one way that all short sales are done. Each bank has it's own policies, I was speaking in generalities. Wachovia bank is actually well know for responding to short sales pretty quickly. It is a bank by bank policy. I was in a webinar that was put on by Bank of America. B of A bought out Country Wide home loans early in this economic crash. Country Wide was the largest home loan provider in the nation, B of A was not far behind, now the one big B of A company has close to half of the home loans in the nation. I was going by B of A policies they presented at the seminar. The said they do not allow buyer change at the end of the transaction. The whole thing starts over again with the new buyer. Now granted some elements of it are accelerated because some of the steps with the first client transfers into the new deal but there is still a lot of things that have to be done. Let me give you an example, One of the frauds they deal with is people who are trying to do short sales where the buyer is a family member or friend and it really is a whole big fraud thing where the people never really move out they just get a bunch of money knocked off there debt. The bank calls that theft. So each buyer has to be carefully vetted to not be family or friend of the one that is selling. They actually send people into the field at times to investigate this. This being a example of how just changing buyers when the short sale is already approved is not what it seems on the surface. The short sale has to be approved for the specific buyer. It is very common that by the time the short sales are approved the original buyer has went on there way and bought something else. I have seen more than a few listings that say short sale already approved. That seminar said it is not going to happen that way. Now there may be some lenders who have a different policy. How far do you want to go down that path of trying to find out who owns the loan and what there policies are. My thought is why go through all that when you can get good deals that don't have that problem built into it. It is not like there are things available in short sales that you can not get conventionally. Again repeating what I said earlier it may appear that way because some short sales have low ball prices advertised but that is not a sale price. You can ask whatever you want for your property, they are not under any obligation at all to sell it at that rate. B of A made it very clear they have a obligation to get the most they can for there investors. Here is what I would like to do. Tell me who it is that is telling you "selling agents were talking about bank approved short-sales". Give me there number. If it's a good deal we can go for it, I just suspect there is another side of the story. Think with me on this one..."they said you have to determine whether or not the bank is eager to let go of the property or if the property is fresh on the market" do you suppose there is value difference in a property that is "fresh on the market" as apposed to one the Bank is "eager to let go". They are just as eager to let go of one as they are another. They don't want any of them actually. There attitude though I think is if we are going to have to own it and sell it we are obligated to our investors to get as much as we can. It isn't like they just throw there hands up on a property and say I have had it sell it for cheap get rid of it. That doesn't happen at all, you can sell anything, you don't have to make the price silly cheap to sell it. You just get the price down at the level that things are selling at, in other words market value. If a assett manager as they are called was dumping stuff cheap just to get rid of it he wouldn't be doing his job, the investors wouldn't stand for that. A good assett manager gets the most for his distressed property. Want to bet there are charts on the wall that show who got least highest write down? The seminar lady promptly quoted off the top of her head "we average nationally 13.7% write down". I remember it because I thought it was so low. I am sure that is a score card. They are not throwing anything away any cheaper than they have to, that was also made clear. "We expect or customers to participate in the loss" she said. I want to say again, you are the buyer, I am just the agent helping you make your decisions. Your decisions. You are driving the car I am just in the back seat telling you what I think Smile. John |