I represent people wanting to buy “those really cheap houses that are in foreclosure”. Absolutely…short sale, third-party (that’s the lender) or pre-foreclosure homes are much less expensive than comparable properties. There are always reasons.
As a buyer it is imperative that you know what those reasons are. One is the time frame. A short sale transaction could be six weeks from offer to bank acceptance (not closing, that could be six weeks further out still) if the seller has prepared their 13 point financial statement for their lender(s); much, much longer if not. Secondly, the listing agent is required to present all offers. Some institutions will wait until days before the foreclosure day to review their offers & choose the best price, fastest close. They will then negotiate hard for a higher sales price. As the chosen one, my buyers will have between 3 and 5 days to finalize their transaction, including having an inspection. The lender will do NO repairs. (They may reduce their price if the repairs are substantial. I’m suggesting my buyers do all inspections prior to placing their offer. They will know what financial commitment they will be facing for the repairs, and the inspection report is sent with the offer to justify the offer price. Yes, they may be out $4-500+ for the reports.) Sellers in foreclosure have been in financial distress for a long time, and their property often will reflect their neglect. I give my buyers weekly updates (and weeks & weeks will pass without any information back from the lender). Finally, any buyer can place as many offers as they want, or are feasible, to purchase the property all the way up until a few days before closing.
What about the second lien holder? They will also be negotiating hard for their percentage of the kitty. If the seller has no money to contribute, my buyer may be asked to fork up funds to satisfy the second’s financial requirement.
Did I mention the lender(s) will negotiate hard for a higher sales price? Did I mention the weeks without any information from the lender?
Purchasing a short sale is not for the faint hearted. If you can keep your heart out of it, you are known among your friends as having the patience of Job, and an increase of 10%+ over your offer price won’t cause a heart attack, then maybe you should jump in…as long as you know all the reasons you are getting a substantially reduced price on your property.
I represent a family that is selling their home of three years “short” – they need their lenders (1st & 2nd) to agree to sell the property at an amount considerably less than what was paid for the house & what was borrowed on a second. The foreclosure is looming and we have received an extension on their foreclosure date as we have an offer on the property. My emotions behind this transaction have ranged from “oh please, not me”, to “well, who could do a better job?”. Initially, there is all the same work to do for a listing: sign the paperwork, take the photos, prepare the house, install the sign. All normalcy ceases when an offer comes in. Negotiating with the representatives of lenders is not like presenting an offer to another family also selling their home. The negotiator’s job depends on their recouping the most amount of money a buyer will pay to purchase this property. This in not the home they were married in, their children were born in, memories were made. This is merely a file on their desk.
I walk a tight rope between the family I represent, mom, dad & three children still living in their home, my listing, the Bank’s property, and negotiating/waiting while the offer is processed. A FORECLOSURE NOTICE is being plastered across the front door of this house, this family’s home, regularly. The negotiators feel my family has ripped their company off, and have little if any sympathy. They are very, very angry. Also, overworked with 300+ files on their desks, & as many agents calling daily/hourly. My family has lived in their home for free since September.
With buyers, I’ve had to carry a flash light on a number of short sale showings lately, as all the light fixtures, cabinets, and door hardware have been taken from the house. My listing remains intact. My clients are attempting to maintain some type of normalcy in the midst of this chaos. They are sad, afraid, angry, and anxious. Where, & when, will they go next.
There is a lot of anger in a short sale.