Question About Short Sales????

Has anyone here purchased a short sale? I mean, literally gone thru all steps and become home-owners?

We are in the process of buying a short sale but there are a few things that seem so "off."

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We put an offer in on a short sale, but it didn't work out. We ended up buying a foreclosure. What seems "off"? Maybe I can help.

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We haven't gone through all the steps yet...but I just wanted to say I totally feel you. We're in the process of trying to buy a short sell and it's TERRIBLE.

And it's completely the opposite of what a normal sale is...going to contract BEFORE you even know if the bank accepts your bid. it's definitely not fun AT all.

Hope it gets better for you!

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We bought a short sale, a year ago tomorrow! I love our house and it was the perfect house and most awesome location for us so we had no problems with the short sale at all. We were in no rush at the time, we were not in it for a bargain, we just wanted this house, regardless. We went to contract in mid November and closed February 26th. Not really too bad. If you do online research on short sales, you'll go crazy. There are a lot of horror stories but if you really want the house, you'll make it work. Just keep patiently emailing and calling your agent, attorney and mtg broker to keep them all on their toes and things will flow.

What feels off? Short sales are a kind of off situation... especially with this economy and banks closing and merging. They have to get every bank in line that ever had to deal with that loan in on the game. So it may or may not take some time.

Ask your agent about short sales. If he or she is not too familiar ask to meet with a colleague to give you the low down. When you understand the process and reason, it's not that bad to deal with.

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we just put a binder on a home that is a short sale but it fell through since a previous offer came back into the picture from 3 months ago and our realtor didn't tell us about it. we love the home and are willing to wait it out but the process is alittle on the crazy side. Any information let me know I am learning also but I have gotten alot more information on them. Is the home in Suffolk or Nassau?

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yes
when we put in our offer we didnt know it was a short sale

but we went throught the whole process

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Posted by AnaMaree77

Yes this is exactly what I mean. We love the house, it's in Islip Terrace. The seller's accepted our offer and we had the house inspected (passed great), we are in full contract with the sellers (signed on both ends) and our mortgage company is sending an appraiser to the house this week. We have to have a full mortgage commitment before the bank will even consider our offer. This makes no sense to me and we are laying out all this money (inspection, appraisal, deposit). It freaks me out that we have thousands of dollars invested and they can potentially say, "Sorry, too bad."

I don't have too much info on short sales and I tried google, but like a pp said...it gets scary!

Thank you for your responses everyone.

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I looked at a few short sales. I felt the same way. also, what if you go into contract, and things fall through on the bank end, how long does it take to get your deposit back? thats what i didnt like, they told me it would be 4-6 weeks! so your money is basically tied up in a house you dont own. we ended up doing a FHA loan with an additional construction loan and bought a major fixer upper. that had a host of problems as well! took us 4 months to close! unfortunately in this economy it seems like everything is taking a while. i think you are protected regardless, but just try to be really prepared and organized with all the paperwork!

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I have been part of a short sale nightmare for a little over 4 mos.

It was us and 2 other bids. we waited 6 weeks, then 8 weeks...then found out we were the highest bid.

Bothered the other realtor non stop for updates.

4 months later we threw in the towel. My apt lease is almost up and we found an even better deal. So that's that.

We never got an inspection or appraisal...we were going to wait for bank to approve us, then go through motions.

good luck!

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Posted by AnaMaree77

Posted by Jbone88

We haven't gone through all the steps yet...but I just wanted to say I totally feel you. We're in the process of trying to buy a short sell and it's TERRIBLE.

And it's completely the opposite of what a normal sale is...going to contract BEFORE you even know if the bank accepts your bid. it's definitely not fun AT all.

Hope it gets better for you!

Yes this is exactly what I mean. We love the house, it's in Islip Terrace. The seller's accepted our offer and we had the house inspected (passed great), we are in full contract with the sellers (signed on both ends) and our mortgage company is sending an appraiser to the house this week. We have to have a full mortgage commitment before the bank will even consider our offer. This makes no sense to me and we are laying out all this money (inspection, appraisal, deposit). It freaks me out that we have thousands of dollars invested and they can potentially say, "Sorry, too bad."

I don't have too much info on short sales and I tried google, but like a pp said...it gets scary!

Thank you for your responses everyone.

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ahhh I am SO Relieved to hear that someone else is in the same position we are!!!! THANK YOU! You have no idea how comforting that is because absolutely everybody that I speak to has never heard of a short sale going the way i'm describing.

The deadline for them to accept or deny our offer is April 15 but i'm getting so impatient, it's been so long now. There are 2 mortgages on the house.

What town is yours in?

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I'll chime in again... But first and foremost I'd like to say... posting here and getting feedback from us mere mortals is great but you really should sit with a professional experienced in short sales to get real answers.

So here's a maybe not so brief of what I know and some of what I recall we went through. Again, our short sale experience was essentially painless, a distant memory, was what it was and faster than we thought. And we got our perfect home (by the way in East Islip... I grew up in Islip Terrace!!). You're getting into a short sale. It's not normal, it's not average and it's not fast so you cannot compare your process with a normal sale. For ours we were quite informed as I went to school with our RE's cousin so we formed a quick personal bond. Our "mortgage guy" was a close personal friend so we got on an inside track there. And our RE attorney is a long time client/friend of DH so he was killer.

From what I know... a short sale (in Suffolk, NY) does involve the homeowners. In a roundabout way, they do still own the house, not quite yet the bank. That would be a foreclosure. Short sale is the process just before foreclosure. Like Jess mentioned, banks would rather a short sale than a foreclosure so even though it seems long, they really do want the deal done and out. So yes, the homeowners "own" the house, the bank just has them by the balls now as they are not paying their mortgage. And most likely the value of the house is less than the remainder of the loan. So in a short sale the bank agrees to accept less than the full loan amount and the homeowner walks away with nothing (and must, they see to it at the closing, every remaining dollar is allotted to anyone but the owners). And the sellers RE agent must show due diligence that the best offer was obtained. So make sure he/she is doing his/her part. That's why you have to keep on top of everyone to make sure everyone dots every i and crosses every t. Because that's the wait really (I've been a real estate legal secretary)... papers sitting on desks, waiting their turn to be reviewed. Squeaky wheel gets the oil. So your offer is accepted, by the homeowners (under the guidance of their RE agent who has documentation of other offers to show yours is the best, be it price, your credit, your down payment amount, it all contributes to the bank(s) accepting). You go to contract, like normal. In your contract, you should have an attorney by this point, there should be a clause "covering your arse" on your deposit should the deal not be accepted by a certain date (I believe ours was a month and it did get extended, maybe twice) as well as closing on or about date. That date helps to move things along and keeps everyone on their toes as the owners do not want this to fall through either. Remember they are making nothing and losing everything every day it does not happen so they want everything to go through. Other monies you are putting in like inspection, you'd do on any other sale risking the same chance of a fallen deal. That's buying a home. A mortgage commitment letter is nothing. You should not be charged for that. Then I believe part of the short sale package submitted to the bank includes title, survey, co's and such. Once everything is together, "the deal" is submitted to the bank. What is reviewed is that the offer accepted was the best offer from the best buyer. They want to know that the owners tried their best to get the full loan amount. Now you say this house has two mortgages. What goes on in the process is the allocation of monies between banks. Let's say for argument sake that the loan owed is $1000. $700 to bank A and $300 to bank B. Now your accepted offer is $900 so the banks are agreeing to lose $100 on the deal. What takes time is the negotiations between banks. Bank A says, I'll take $600 and you take $300. Bank B says, no, we want $375 and you get $525. Back and forth until a deal is met. Now... keep in mind that the RE agents and mortgage brokers want their $.02 in the deal for their commission so that is hashed out as well. Most of the time, they take a "loss" to get the deal made and walk away with less. But don't think everyone does not make their penny (except the seller of course!).

So pretty much that's the wait. Passing contracts back and forth. Deciding on commissions and who's going to take the hit. Which bank gets how much. Was proper due diligence done to get the best offer for the best payoff of the loan(s).

If you really love the house, it will all be worth it in the end. And you will soon forget about all this heartache you are going through. Look... like I said, we signed contracts in November. I bought Christmas lights for the house with crazy high hopes in anticipation of things moving along but I knew I was dreaming. We closed Feb. 26 (a year ago today! ) And I waited almost a year to put those lights up (and I bought just enough by eye!) and it was the best feeling ever to see them lit up! The way I look at it I had plenty of time to pack our old home!

So phone calls, phone calls, phone calls, emails, emails, emails, take a break, go out to dinner, do the wineries, drive out to Montauk, phone calls, phone calls, phone calls, emails, emails, emails! In due time it will happen. Trust your professionals.

I truly hope I helped and not made things worse or more confusing!

I truly wish you lots of luck and a peaceful home buying experience! Islip Terrace is a great neighborhood! My mom and three siblings live there!

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Holy Cr@p!!! That was a long post!!!!!

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Posted by CaMacho
I just wonder why your realtor didn't explain it all to you and let you go ahead with an inspection, etc without the bank approving the offer. I don't want to scare you b/c it CAN work out and I hope it does for you!! Much luck!!!!

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Another thing to add, like you need more from me! We too did our inspection before final signed contracts. But 1. We were already in accepted offer/binder and in the back and forth reviews of contracts at that time. and 2. With a short sale, the inspection is really for your own good to know the house you're getting into. It's not like they will renegotiate the price for termites. It is what it is at that point (this is where the agents taking hits on commissions may come in to play to make the sale but it's a long shot). That's why it is a good idea to get it done prior to contract signing.

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BnBDreamin & Neenie, Thank you both SO Much! I have been getting guidance from our Attorney, Mortgage Co. , Realtor but in the end...I worry that they're all out for their own pocket and i'm worried about Mine. According to your posts, it seems as though everything is going the way it should and I feel so much better about everything.

Thank you, thank you, thank you for taking the time to post and clarify everything. It was most helpful. I'm so excited about the house but trying to remind myself not to get "TOO" excited. The house is really in GREAT condition, I mean, we can literally move our stuff right in and eat off the floors...not that we would do that!!!!!!!! hahahha. Most of the houses that i've seen that are not short sales, were in far worse condition.

The only thing is that the apartment downstairs needs some fixing up, but nothing major.

My biggest concern was tying up all our money without the bank accepting our offer yet. According to the information you ladies provided me with, it seems like this is normal in this situation.

Again, THANK YOU!!!!!!! You were a blessing.

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You are very welcome! Any home buying experience is incredibly daunting. You are "tying" up huge amounts of money and it's scary but that's just what it is. The biggest... the deposit, should really have a back up/right to recind to make you feel a little better.

Just wait until the closing when you really dump lots of money!!! I never wrote such checks in my life!!!!

But it's all for the best cause ever!

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Well at least that's what I was told the process was! But yes, I've heard every state is different when it comes to short sales. That's why the online research gets you nightmare stories. What happens in Texas and Florida is not the same here. Texas has CRAZY short sales!

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So helpful..thanks for all the info! One more questions, were any of you able to contact the sellers mortgage company during the process? We are in the waiting stage ( accepted offer, inspection done, full package was sent to the sellers bank) now we are just waiting...

Its frustrating that I cant call anyone, check on anything...its all up to the seller. I know its in his best interest to move things along, but I still dont feel like he is as eager as we are...after all he is leaving mortgage free right now.