Crossing my fingers

SarieP

I found a house that I want to buy. Mr. P and I decided not to move into the townhouse we were looking at and instead found a house that is in short sale right now.  It is super affordable.  It needs a little work but is in good shape, has plenty of room for us, decent landscaping, great location, etc.  I'm not sure of the process for a short sale though.  Any of you know anything about it or have any suggestions?  Obviously I'm a first time homebuyer.

danieliza1127

You should have a realtor and they will help guide you through the process.  Short sales take a LONG time to go through because the bank holding the mortgage has to accept your offer, which by definition of a short sale, is much less than the seller owes on the mortgage.  We put an offer in on a short sale house and after 2 months of waiting, we gave up and found another house instead.  You have to be prepared for it to take a long time. 

SarieP

hmm, I would think that the bank would be ready to get it off of their hands.  Why does it take so long?

vallyhoo

If it is a short sale that has already been approved by the bank, that can speed up the process slightly. I also heard they might be extending the first time homebuyer tax credit so you might be able to still qualify, but I'd really doubt if you could close by the end of the year.Our realtor told us the reason the banks take so long to respond is because they just don't care and are just that busy. The paperwork can sit there for months, despite repeated calls. They are taking a loss on the house so it isn't top priority to them.

danieliza1127

There's just a huge backlog of homes going into foreclosure and doing short sales and since the banks are taking a loss on them, I guess they aren't in a big hurry to get rid of them.  Or it's not on their high priority list right now.  I don't know for sure, but that was what we got out of it from our realtor.  Everyone I know that has had to deal with a short sale has had this long wait.Our friends tried to sell their house on a short sale and even though they had a good offer from a buyer, the bank still didn't approve it and put it in foreclosure instead.  So basically the bank would rather let the house foreclose than take an offer.  It doesn't make sense to us logically but it must make sense to the bank somehow.

LesPaul

The short sale is between the seller and their lender, so it doesn't really involve you except that it may take a long time to get through the approvals and paperwork.  If you have the time and patience, I'd go for such a great deal.

SarieP

Oh so more than likely the buyer will have no negotiating power as far as home price or closing costs go?

vallyhoo

As I understand it, no. If you try to get contributions toward closing costs, or drive the price down, it just decreases your chances of getting your offer approved.

SarieP

Crap! I was hoping for closing costs.  The price I can live with.  I just don't want to have to bring money to closing.  Bah.

LesPaul

You probably won't get any closing costs.  If the seller is negotiating a short sale, they are out of money and offering their lender to accept less than the note they already owe.  They won't have anything to offer you for allowances or closing costs.  You basically get that included in the (presumably) way below-market price.