First Time House Hacker - Buy A Short Sale?

Question

https://www.redfin.com/IL/Chicago/10400-S-Claremon...

Would you recommend buying a short sale with FHA to house hack as a first time buyer? This property looks like a good deal. I showed a broker, and he says:

"Remember a short sale can take up to a year or more. What if the rates are higher by then. Your payment goes up. What if the tenants have a lease when it gets approved? The bank can come back and say no to the list price and want a higher price based on recent sales whenever it gets approved."

My thoughts:

-What are the chances rates are significantly higher in the time it takes to close? Seems worth the risk to save $100K.

-If the tenants have a lease, then I don't have to look for tenants?..

-What are the chances the bank wants to raise the price? (Actual question for you guys, not rhetorical)

Thank you!

Wayne Brooks · Answer

You sign a purchase agreement, along with the owner.  The agent submits that along with the short sale package (owner financials, etc) then the bank sends their own agent to value the property.  Counters take about a week.  A year is a crazy estimate of time, and while maybe 1% take that long,mot is not the norm.

Robert Bourne · Answer

If there are tenants, you will have to honor the lease. Get a copy of that lease and make sure you want to live with those terms. The tenants also probably have a security deposit that you will be on the hook for when they move out.

FWIW, I bought a short sale here in Colorado and it closed in the typical 45 days.

Art Maydan · Answer

How does the process of dealing with the bank work? Does your agent send them a bid and they get back to you in 60-90 days? What if they counter, and then you counter? Is that another 60-90 days? What I'm getting at is where does the 1 year+ time to close on a short sale come from? 60-90 days isn't bad.

Wayne Brooks · Answer

The list price on a short sale is set by the owner and agent, and it is not generally an indication of what price the bank will accept, as they do their own evaluation.  You should be able to have a definite answer within 60-90 days.

Art Maydan · Answer

bump

First Time House Hacker - Buy A Short Sale?

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