Sumpthinspec02 asked:


I am in the market for my first home. Many of the homes listed are short sales. I have read that short sales are risky, can take a long time to close, and most never close. However, all the homes I am interested in are short sales. What things do I need to know or should I look out for if I choose to make an offer on a short sale property?

Also, would I get a better price by waiting for the bank to take ownership of the property or are short sale prices actually better than bank owned asking prices? And in which situation is there more room for negotiation? Also, should I expect any seller concessions such as help with closing cost in either one of these types deals?

Maia

4 Responses to “Buying a short sale property?”

1. george 2 on January 23rd, 2009 11:58 pm

   if your buying a short sale property i doubt that the seller can afford to help you with closing costs or other deals!!

2. src50 on January 25th, 2009 3:32 am

   What you read about short sales is correct. Don’t even try offering on one unless you have the luxury of time and patience to wait.

   Bank-owned properties (REOs) are a better bet, but make sure you are preapproved with a lender first. Right now, you can often get the seller (bank) to cover closing costs as they are anxious to move the properties. Be sure to put a home inspection contingency in your offer and hire a professional inspector.

3. I Buy And Sell Houses on January 28th, 2009 8:19 am

   It’s true that short sales are risky, can take a long time to close, and are unpredictable. (Some do close.)

   What you need to know: The lender will require that the seller receive no money from the transaction. So negotiating with the seller really is a fiction, at least if the seller realizes that he’ll receive nothing. The real question is: What will the bank approve?

   A bank will look at a BPO (broker’s price opinion, like a quick appraisal by a real estate agent) to determine approximate value of the property. That’s the case in both short sales and foreclosures. So, while it really doesn’t matter to the seller in a short sale what he gets, if he accepts a too-low offer, the lender won’t approve it. With a foreclosure, it’ll get listed near the BPO price. If it doesn’t sell, it’ll be reduced in price periodically–maybe $5,000-$10,000 every 30-45 days.

   Many investors prefer foreclosures because they’re usually quicker and more dependable. As for the better price, it’s impossible to say. Both really depend on the BPO.

   As noted, there’s plenty of room to negotiate with the seller in a short sale. But the real decision will be made by the lender. There sometimes is room to negotiate with the lender in a foreclosure. Depends on the BPO, and how motivated the bank is to get rid of the property.

   Lenders sometimes will help with closing costs. Not always, and asking for it will weaken your offer. But it is done.

   Advice: Especially on a short sale, work with a Realtor who knows and has done short sales. Unfortunately, the real key is the listing agent, not the buyer’s agent. So if the listing agent knows what he/she is doing, prospects are sometimes OK. If the listing agent doesn’t know what he/she is doing, it’ll be a disaster. Your agent (the buyer’s agent) can help the process somewhat, so choose the best one you can.

   There’s a lot more to know, but that should get you started. Just hook up with a good Realtor who can help you in the process.

   Hope that helps.

4. Gunnarlicious on January 30th, 2009 5:43 am

   Listen…..this last guy keeps throwing out BPOs and what not….but I don’t believe that he knows anything other then working with a realtor….he must be in a real estate capacity to keep advertising to work with a realtor. At the end of the day….banks don’t always get BPOs…or broker price opinions…..and in today’s economy…..banks are willing to take the hit rather than paying the cost to go through a realtor. I promise you that…..

   The last comment was correct in stating that in a short sale, the seller will not be making any money but the proceeds would go straight to the lien holder.

   They do close if you contact the bank directly….the bank already has an attorney involved on the bank’s dime…and they will be trying to close things up as quickly as possible. Trust me…this is coming from someone that has been working in the commercial loan workout department of a bank for many years………

   make the offer and at the end of the day…you are saving the bank money for holding on to such property…

   This top contributor that keeps suggesting that banks go off of BPOs is riciculous…..BPOs are only done in the event there is no access within…they are called “drive by appraisals” and he is right in saying that the valutions are less than solid….

   Typically….a delinquent customer..unless on bad terms…will give the bank access to get a true valuation of the property…at the same time…….the banks percentage of delinquent properties allows them to take a “deal” with a short sale…..and at a discount….why get involved realtors who just gouge you for money at the end of the day.