I believe that the IRS is forgiving that these days.
I’ve been truing to buy (bargain basement) for months. My agane now asserts that listing agents are sandbagging other agent’s offers (to ensuse his buyer gets the property, nad, more importantly the agent gets both the selling and buying comissions.
To the point: I am being advised to simply throw offers at everything that comes along - if 2 happen to stick, well…
The other option is to simply deal only with the listing agaents, mosy of whom are incommunicado.
Realtors™ - any advice?
Bottom line: unless you have a buyer’s agent (rather unusual; you’d know if you did), the realtor is just a salesperson for the seller. Every time they say something, remind yourself “this is a salesperson talking, not an impartial giver of advice”.
Also remember that the only obligation you have to the realtor is to keep them involved if you buy a home they originally showed you. In particular, just like with any other salesperson, if they’re not showing you what you want, go see a different salesperson.
This varies from state to state. In New Jersey you have to be the agent that obtains the sales contract. If you show a property to someone and they go see it with another office whose office writes up the contract, you are out of luck.
I don’t understand why more people don’t use a buyers agent. It costs the buyer nothing extra and gives you someone on your side of the contract.
I’m currently in the process of buying a short-sale house. Someone else had previously made an offer, but it fell through after the bank approved the short price. The bank is now in the position of wanting to dump the property fast. It goes to auction soon, if they can’t find a buyer before. We know the price they’re willing to accept (about 25% below market based on comps in the area in the last 3 months), and have made that offer.
So we’ve managed to avoid a lot of the short-sale stresses, but instead have to deal with a bank in a hurry.
Interesting, Pleonast.
I’ve found out that there are 3 liens on the house in question. The sellers of the house have to sign off on the owners, and they were “excited” to get my offer, so hopefully that is a good sign. The house has apparently been on and off the market repeatedly for quite some time, and I think at this point the sellers are ready to dump it. It’s all up to the banks, though.
It’s a difficult situation as it’s hard to know what to do - I’ve seen another house today that I liked more than the non-short-sale house, but I still love the short sale house and it’s a fantastic deal. Do I wait on the off chance I get it, or do I go for the other one? Right now, I’m pretty much just planning to wait for a little bit and watch the market, but, it’s a challenge. One would think banks would get better offers and have less deals fall through if they could at least tell you if your offer was the highest! I have no idea if they have gotten higher offers so it’s hard to know if it’s worth waiting for.
There are three liens on the house? That means that potentially three banks that have to sign off possibly depending on how far upside down the mortgage holder is. Has the bank already signed off on a lower price? I mean is it approved for the lower amount? Potentially, one of the banks could be left holding the bag.
Here is a real estate agent’s blog entry on dealing with short sales in VA. My mother in law tried to buy a short sale and it was a pain in the ass. She gave up after a few months and the bank later foreclosed.
Thanks for the link, CA. I will note that this seems to have been written before the market really took a dive - I’m wondering, does anyone have recent insight into the market? Are banks less likely to want to foreclose? There are probably as many foreclosed homes in my price range as non-foreclosed, and they’re usually in such bad shape that I avoid even going for a showing. I can imagine that other buyers may feel the same way. Further, the price on them isn’t even that great when the damage is considered.
Title person checking in… not only do I close these for other people, I also bought the house I am living in right now via short sale.
Annie Xmas has already spoken well on the subject. And like she says, if you decide to go forward, prepare to wait. It took 4 months for us to get this place, and I have one on my books at the office that has been sitting there for 6 months and is still not ready to close.
Used to be, most of the short sales involved two banks (1st mortgage and 2nd mortgage, and the 2nd was usually the one taking the short). Now, we see more and more situations where there is only one loan, but if the equity is less than 20% we have to deal with the bank AND the private mortgage insurance company. Which adds a whole new wrinkle to the process, and drags things out even more.
Basically, I think it boils down to how much you want that house, and whether or not you are willing to jump through the hoops for it.
For those who are really interested, here is my office’s general procedure on short sales. Note: It is four pages long:
WHAT IS A SHORT SALE?–A sale that takes place whereby the bank takes a short payoff from what a homeowner owes, and the homeowner is relieved of the debt.
WHY WOULD A HOMEOWNER WANT A SHORT SALE?
Homeowner sinking underwater
To avoid foreclosure
To avoid deficiency judgment–The mortgage company has the right to pursue judgment for twenty years.
To preserve credit worthiness.
To be able to buy another home under the FHA
WHY ARE BANKS WILLING TO DO SHORT SALES
Cost of foreclosing vs. short sale–foreclosures cost much more; i.e. attorneys, appraisal, rehabilitating and marketing property.
Speed-short sale is quicker–a discount sale takes 30 to 60 days; a foreclosure 12 - 15 months.
Tsunami is yet to come
Wall street ratings–the more bad loans you have the lower your rating.
Investors money.
Foreclosure is a devastating crash. Short sale is a fender bender.
WHY WOULD A BUYER WANT TO BUY A SHORT SALE?
Low offers are welcomed
Get a bargain–real estate “on sale”
The bank/mortgage company absorbs the loss.
Better than foreclosure bidding–To bid on a foreclosure, buyer must have 20% cash on the spot and cannot have an inspection of the property.
Opportunity to inspect the property.
Benefit from a real estate agent’s expertise.
-1-
With a short sale, all players–buyer, seller, and mortgagee–everyone is rowing in the same direction.
IDENTIFYING SHORT SALES PROCESS
Position yourself with the homeowner
Develop the ability to explain
Use your special expertise
Get the listing
Pricing strategies
“This sale is subject to mortgage approval.”
Handling brokerage fee
Have authorization form notarized.
You must use the authorization letter authorizing you the agent to negotiate on behalf of the homeowner. Do not put the homeowner’s social security number on the letter; always use the loan number. You must get the letter notarized.
You must advise the homeowner to create a hardship letter that is truthful and believable. It should not be longer than two pages.
SHORT SALE PROCESS
Fill out short sale questionnaire with homeowner
Listing
Hardship letter
Contact Loss Mitigation Department (work out department). Do not go in collections.
Loss mitigation kit–Ask for it ASAP. This is the kit whereby the owner is asking for a discount.
Get mortgagee’s email address and fax number.
Send over the authorization form by email so that they can talk to you.
-2-
MANAGING THE LISTING
Fill out questionnaire with homeowner.
Issue of other assets–just ask the question and list them if any.
Moving expenses–You can put in short sale negotiating, but the money must be paid directly to the moving company.
Let everyone know–“This sale is contingent on mortgage company’s approval.”
Need a contract in writing to order to be notified by the bank on whether or not they will accept the short sale.
Market the property.
Send a weekly email to the Loss Mitigation Officer
Spread the word re: this sale is subject to mortgagee approval.
Educate the other agents.
HEADING TOWARDS SUCCESS
Receive an offer.
Put in contract “This sale is subject to mortgagee approval.
Seller signs contract
Proceed with attorney review.
Apply for mortgage & get inspections NOW!
Submit contract and complete loss mitigation kit to mortgage. Scan, email and send by mail.
LOSS MITIGATION
The name of the department you will deal with in negotiating a short sale. They will work with you. Their instructions are to sweep out the bad loans and quickly negotiate a deal to avoid foreclosure. They are anxious to deal with you.
-3-
SHORT SALE ADDITIONAL NOTES
Is default necessary? No. You can only negotiate a short sale in early stages of foreclosure within 60 to 90 days of notice. Explain in hardship letter how they maintain their credit.
Typical discount–as close to appraised value as possible.
10 - 22% of original first mortgage.
Handling a second mortgage–Ask the first mortgagee to negotiate with the second mortgagee. $1,000 - $3,000 to second mortgagee is a standard payoff.
Get a full release from the debit.
Tax considerations–HR 3648 12/14/2007–Owner of the primary residence is exempt from paying taxes on the forgiven debt unless they refinanced and cashed out and used the money for something other than their house.
Remember: Seller gets $0.
Strategies to include seller’s moving expenses.
Buyer must offer something to help–pay for seller’s security deposit, pay movers, etc.
Buying another home FHA
Loss mitigation is going to ask for a Proforma HUD-1
Seller’s proceeds on HUD1 must equal 0.
Email HUD1 to mortgagee.
Email the bank the buyer’s mortgage commitment.
You must be persistent and diligent.
After the offer is sent you must email or call the Loss Mitigation
Officer every two days.
You will get a call on the broker’s commission saying they do not pay 6%, they only pay 1%. Then you negotiate. Accept
5½%. They will pay it! They are under instructions to try the broker.
Time frame–30 to 90 days to get approved.
Buyer must have the right mortgage lender, one who knows how short sales work so they can either float the rate while waiting for the short sale approval or can close in a short period after approval.
Must have an attorney familiar with short sales.
-4-I appreciate all the feedback that was given in this thread, everyone.
I opted to make an offer on a different house and we came to an agreement on price last night. Presuming the inspection goes okay, I’m planning to withdraw my offer on the short sale, and I appreciate that people didn’t give me too rosy a view on it!
Hope all goes well.
And it won’t be a house. It will be a home 