The Wild West of Short Sales
Buying a short sale is a way to possibly find a great deal, but you should be aware of the complexities of this kind of transaction. A short sale occurs when the bank agrees to a home selling for “short” of the total amount still owed on the loan. Take note: short has nothing to do with speed - in fact, short sales are often slow, complicated transactions!
Because the home is being sold “as is”, significant repairs may be needed. It’s important to get the full picture on the condition of a property you’re considering buying as a short sale and weighing that against what your budget is.
Short sales are also notorious for falling apart in the offer stage. Both the seller and the bank must approve your offer. Plus, the seller can pass on several offers for the bank to consider, so getting your offer accepted only means that you’re in the running!
Here are two stories of short sales from our very own agents:
When the bank counters with an offer
This first story comes from Bill Allen, a real estate agent in Boston:
I was working with buyers that were getting married and wanted a new home to start their life together. They put in an offer on a home that was a short sale. I told them about the ups and downs of a short sale. My concern was the timeline of getting an accepted offer and closing before they got married. They submitted an offer below the asking price. After waiting 5 1/2 months, the bank responded with a counter offer of $10,000 above listed price. The buyers could not afford the price and were frantic. I told them to concentrate on the wedding and that I would keep looking. Two days later, we looked at at home. They submitted an offer the next day and it was accepted. They closed a week before their wedding and are still living there today.
We’re so glad everything worked out for these two buyers in the end, but they learned - like many people do - that the bank has the final say in a short sale!
The long (and messy) road to a good deal
Short sales occur when the home seller is in financial distress. Unfortunately, sometimes home repairs are not the worst thing you’ll find in a short sale listing. Here’s a story from Ron Simenton, a real estate agent in DC:
A total of 6,000 sq. ft. for $275,000? We found my buyer's dream home...
...full of rotten food, clothing, and quite a few areas showing homeowner neglect, but he still wanted the home! After we received the short sale approval and were ready to close at $315,000, vandals broke into the home and stole many of the home’s fixtures, including the AC units, and destroyed the drywall to get to the copper pipes!
After a whole year of short sale negotiations, thievery, home inspector price gouging and an unreachable listing agent attempting to decrease the commission at closing, I was able to keep the buyer happy with get him to closing approximately a year later!
Yikes! We’re glad this buyer got his dream home at a steal of a price. If you’re thinking of purchasing a short sale home, don’t be discouraged! Just ready yourself by reading our Short Sale Guide so you know what to expect in the process.