Author Topic: Buy before or after the house goes into short sale?  (Read 2903 times)

DougStache

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Buy before or after the house goes into short sale?
« on: August 27, 2013, 07:16:40 AM »
A house my wife and I are considering buying is about to go into short sale.  Buying it before the short sale could lead to a great price because we know the seller is desperate to get rid of it and won't want a short sale on his record, however buying it after could lead to an even further reduced price but with additional paperwork due to the short sale process.

Our real estate agent is pushing us towards "before" but he has a bit too much skin in the game to give an unbiased opinion.  Has anybody been in this situation before? What would you do?

Note: We're not 100% set on this house, but I'm trying to plan ahead in case this is the one we pick.

jrhampt

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Re: Buy before or after the house goes into short sale?
« Reply #1 on: August 27, 2013, 08:08:28 AM »
We bought a short sale.  I can tell you that you will have less negotiating room with the bank if you wait for the short sale than you do with the seller now, most likely, although the initial asking price may be lower with the short sale.  Also, short sales are notorious for taking longer to close than a traditional sale.  We were not in a hurry, so this was not an issue for us.  However, it did have another offer before ours that fell through - not sure why, but we speculated that the other buyers got tired of waiting.
« Last Edit: August 27, 2013, 08:11:09 AM by jrhampt »

Another Reader

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Re: Buy before or after the house goes into short sale?
« Reply #2 on: August 27, 2013, 09:34:17 AM »
You lose control of the situation once the seller goes into default.  The bank could refuse your offer(s), could decide not to work with the agent selected by the seller, could get Broker Price Opinions that are not realistic, and/or could decide to go ahead and foreclose.  I'm not emotionally attached to houses, so I look for a price that is favorable to me wherever we are in the process.  If the house goes to short sale or foreclosure and I don't get it, tough.  If you can take that approach, then make an offer now, if the seller refuses it, wait for the short sale or foreclosure.

In many markets short sales are priced below market to attract offers and get the ball rolling.  The bank will often counter, the first buyer drops out, and the list price goes up to what the bank will accept.  In some markets foreclosures and short sales end up selling for full retail value, despite being sold as is.


DougStache

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Re: Buy before or after the house goes into short sale?
« Reply #3 on: August 27, 2013, 09:46:48 AM »
You lose control of the situation once the seller goes into default.  The bank could refuse your offer(s), could decide not to work with the agent selected by the seller, could get Broker Price Opinions that are not realistic, and/or could decide to go ahead and foreclose.  I'm not emotionally attached to houses, so I look for a price that is favorable to me wherever we are in the process.  If the house goes to short sale or foreclosure and I don't get it, tough.  If you can take that approach, then make an offer now, if the seller refuses it, wait for the short sale or foreclosure.

In many markets short sales are priced below market to attract offers and get the ball rolling.  The bank will often counter, the first buyer drops out, and the list price goes up to what the bank will accept.  In some markets foreclosures and short sales end up selling for full retail value, despite being sold as is.
That's exactly what I needed to know and pretty close to what my real estate agent said; I just needed to hear it from someone without any skin in the game.  We are also doing our best to not get emotionally attached to houses, staying very logical about it.  However, this does lead to an attitude of "yes, hypothetically if we were to buy a house, we would buy this one" and we ultimately need to get over that :)

Thanks!

show me the money

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Re: Buy before or after the house goes into short sale?
« Reply #4 on: August 27, 2013, 12:27:43 PM »
My wife an i bought a short sale house, took 9 months, at which by the end of it my landlord was trying to get me out cause she was pissed that we were looking for a house. it was one of the biggest pains in the butt ever, and i don't ever see myself buying another shortsale again, there were a couple other houses that we were interested in that we let slip through because this one was about $30K cheaper, but not worth it, get it now if you can

mm1970

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Re: Buy before or after the house goes into short sale?
« Reply #5 on: August 27, 2013, 10:27:02 PM »
I have a friend who tried to buy a short sale and the bank refused.

They foreclosed.  A year later the bank sold the house.

My friend ended up getting it for $100k less than the original asking price.