Short Sale Advice?
Hello everyone- I’m a first time buyer, so bear with me if I’m asking obvious things. I’m looking at purchasing a short sale 2 family. The property was built in 2005, and does need some minor repairs (doors, windows replaced, needs new paint and a good cleaning, etc). After speaking to the agent, she said…
Hello everyone-
I’m a first time buyer, so bear with me if I’m asking obvious things. I’m looking at purchasing a short sale 2 family. The property was built in 2005, and does need some minor repairs (doors, windows replaced, needs new paint and a good cleaning, etc).
After speaking to the agent, she said that the seller was looking to get a substantially lower price than the listing price (list was 435K, she says the seller/negotiator would accept 380K).
Obviously, I’m going to get it inspected / appraised, but not before I make an initial offer. Comps are valued at around 465. The biggest issue I can see is the current owner, who seems a little unhinged and might present problems down the line.
Aside from structural / repair issues, what else should I be wary of in this situation?
Be sure the short sale is really approved. An approved short sale has an expiration date. If its approved, that means you have to move quickly before it expires.
The down side to short sales; is you send in a bid, the realtors says the bank “approved” it, but its really not approved until you have paperwork from the bank and then at the last second after you’ve had a home inspector and and appraisal and hours of paperwork, the accept 410k and your great deal goes out the window. On the flip side, you get a seller who just really wants to move on, they leave the place broom clean and you have a great new home.
I do loans on these all the time. If there are broken windows, you will have to go in and replace them, property must not have any health and safety issues.
Feel free to call me if you need me.
Vanessa Thatcher
Senior Loan Officer
ATLANTIC HOME CAPITAL
Tel: 631-687-3510 x106
EFax: 631-918-5222
Cell: 631-672-4113
I am stuck on the built in 2005.
One of the recurrent themes on this site is appreciation for the craftsmanship that was present in America before the “Shlocking” that started in the 1970’s.
I advise stepping back from the “bargain” you hope to invest in, and find out the circumstances behind the planning and building of the property.
There is some recent condo development that is of decent quality, but meeting modern code is no assurance of competence. Every incentive on most projects is to cut corners and cheap out whenever possible.
If you are inexperienced, do not assume that modern construction is anything but shoddy. And that goes for the “home inspectors” that you think are there to protect you. These inspectors are by and large honest, they are just reading from a different script.
I have seen old homes that were shoddily constructed, but that is the exception, not the rule. Unfortunately, modern construction is the reverse.
Why should a basically new house require any fixing up? If you are planning to flip, well then patch and paint, and look for a worse sucker.
When I try to fix something, I try to demo and remove damaged materials until I can get back to something strong. That won’t work if the whole place is flimsy.
Just my 2 cents.
there’s a reason the banks take so long. there’s a boatload of due diligence required, meaning resources ($$$) all for the pleasure of being able to book a loss. in concert with unknown issues with the seller you will probably never find out why many don’t go through. be prepared and put a great package together:
http://real-estate.lawyers.com/residential-real-estate/Buying-A-House-In-A-Short-Sale.html
Thanks, great advice everyone!
Short sale is approved by the bank, but I think the problem will be getting the seller to go forward with the deal, and I’m assuming there’s some kind of repair issue that I just don’t know about yet. I do know that the sale has fallen through twice in the past, although I don’t know why.
I have been speaking to an experienced attorney which is reassuring.
Once the bank agrees to a short sale as a viable solution, time starts to stand still. With the bank off their back, the seller has zero incentive to do anything quickly. I have seen a short sale add two years to the owners tenancy. There is no magic to a short sale valuation and you don’t get something for nothing. Make sure the inspection is meticulous. There probably won’t be any room to adjust the price down if you suddenly realize it needs a new roof.
Watch out for ownership/title problems – as mopar says, get an experienced lawyer for this and prepare for a LONG road to closing, while the property becomes more and more decrepit. Good luck!
Get a lawyer who has experience in short sales. Did the bank agree to a short sale? If so, the main issue is that you will wait around forever while they decide, then close in a jiffy.