Buying a short sale-advice needed!
Simsbury, CT · Member since 2016 · 22 posts · 1 vote
Buying a short sale-advice needed!
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Virtual Assistant · Columbus, OH · Member since 2016 · 6 posts · 1 vote
10ythe only suggestions that come to mind are as follows:
-consider the use of a hard money lender
-consider assigning your equitable interest in the purchase contract to another investor who has the cash to close for a fee. (Aka wholesaling, which some lenders and tittle companies are against. Just depends who they are)
Also if you put earnest money down and agreed with the seller in the purchase contract that is was "non-refundable" earnest money then yes you will loose that money if you "back out" of the deal. Unless there is some creative way I'm unaware of to get your earnest money back which I doubt.
There are rist associated with the suggestions above so consult with a RE attorney familiar with those scenarios in your area and do your own homework as well.
I'm no expert but hope to have pointed you in the right direction.
28 Replies
- Virtual Assistant · Columbus, OH · Member since 2016 · 6 posts · 1 vote10y
the only suggestions that come to mind are as follows:
-consider the use of a hard money lender
-consider assigning your equitable interest in the purchase contract to another investor who has the cash to close for a fee. (Aka wholesaling, which some lenders and tittle companies are against. Just depends who they are)
Also if you put earnest money down and agreed with the seller in the purchase contract that is was "non-refundable" earnest money then yes you will loose that money if you "back out" of the deal. Unless there is some creative way I'm unaware of to get your earnest money back which I doubt.
There are rist associated with the suggestions above so consult with a RE attorney familiar with those scenarios in your area and do your own homework as well.
I'm no expert but hope to have pointed you in the right direction.
- 10yPouyan BroukhimBusiness MemberLos Angeles, CA · Member since 2016 · 64 posts · 19 votes
why don't you just request an extended escrow and maybe release a portion of your earnest money deposit?
Thank you
- Simsbury, CT · Member since 2016 · 22 posts · 1 vote10y
I am brand new to all of this. This is our first home purchase so I don't quite understand all the lingo. We put down a $1000 deposit with our offer and now have to give the additonal $4000. In our offer we specified 60 days from bank approval for a promise to close and 70 days from back approval for closing. So technically they changed the terms of our offer. Our realtor suggested that in short sales, banks rarely give extensions....I don't want to put up the additional $4000 if we can't follow the terms.
- Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes10y
@Nicole Smith Take a breath, all is not lost. And ignore everything @Pouyan Broukhim said. A couple of standard things; there is no way your lender should need another 58 days to close. The biggest delay in getting a 203k is getting an Approved contractor with an approved scope of work and price, that fits within the appraisal to be done afterwards. If your lender doesn't already have a couple of approved 203k contractors they've worked with, switch lenders Now. Both agents should have known that you typically do Not get 60-70 days to close after the official shorted bank Approval letter, 30 days is typical. Also, it IS typical for the seller's lender to grant at least one extension for the closing date. I assume your contract specified $4k additional EM upon bank approval? Your contract terms still dictate when you would forfeit this, and your inability to obtain the financing in time would likely mean you get it back. read your contract in detail.
- Investor · Fort Lauderdale, FL · Member since 2015 · 172 posts · 30 votes10y
@Nicole Smith, it's great that you heard from the bank this quickly. We have been working on a short sale since March of last year. The contact has be signed by the homeowner and the bank has sent two appraiser's out twice now to do the appraisals. But like @Wayne Brooksstated just take a deep breath. Definitely think about a creative way you can get the deal done if your funding will not be in place in time. What about bringing a partner in on the deal? I pray that you are able to get this deal done... You just have to get with your Realtor and Finance Company to figure this one out. Good Luck!!!
- Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes10y
Originally posted by @Nicole Smith:
My husband and I recently decided to make an offer on a short sale property. We submitted our offer on January 11th expecting full well to have to wait awhile to get any sort of response. We were notified on the 14th that our offer was accepted by the seller and being sent to the bank. We got the ball rolling with our lender so all of our cards would be in place of we got approval from the bank. Well as a surprise to EVERYONE our offer was accepted by the bank on January 29th! We are told today that the bank set the closing to be on March 4th and unfortunately this is not enough time. We are doing a 203k Fha loan and our lender says the earliest we could close would be March 30th. Are we just out of luck? Should we back out now? And if we do will we lose the money we put up already?
Hi Nicole, my immediate advice is a short sale is just a bad sale. Granted, I only speak from personal experience in purchasing short sale, of all the short sale opportunities I have encountered, I have only captured 2 maybe 3, all of them took an immense amount of time and I thought they would never happen. When I say time I mean in excess of 6+ months - Again, I only speak from personal experience. I have heard of people closing short sales rapidly, however, I think this is not the norm, I think my situation is more common. I would not put my eggs in this basket if you are planning on doing a 203k, you may be setting yourself up for disappointment or failure. I know you mentioned they "accepted" your offer, but you should be prepared for a huge roller coaster ride on this one, it already seems flakey on the front end, furthermore, most of my unsuccessful dealing, were just that, unsuccessful. I stay away, however, this is not always the consensus in the REI community. I just want to reinforce the fact, that this is my personal experience, it is not to say, this is the norm, but I consider myself fairly experienced with a fairly large buying appetite and capacity, trust me I am always looking for deals. If these were easy, everyone would be snatching these up, just think about it :) Finally, just knowing and being apart of hundreds of 203k transactions for our private client construction business, this is not a forgiving loan and encountering large challenges with the purchase, may influence your opinion of the simplicity of the 203k, if you intend on using a 203k, perhaps seek something that requires more work and remove yourself from this short sale.
- Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes10y
Originally posted by @Courtney Merricks:
@Nicole Smith, it's great that you heard from the bank this quickly. We have been working on a short sale since March of last year. The contact has be signed by the homeowner and the bank has sent two appraiser's out twice now to do the appraisals. But like @Wayne Brooksstated just take a deep breath. Definitely think about a creative way you can get the deal done if your funding will not be in place in time. What about bringing a partner in on the deal? I pray that you are able to get this deal done... You just have to get with your Realtor and Finance Company to figure this one out. Good Luck!!!
Courtney, great advice and the timeline you referenced is very "REAL" - I know I have 1 or 2 short sales rolling around in the background since May of 2015...... and the story goes on
- Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes10y
Yeah, short sales are a kind of fiction, a commitment that means nothing in reality. Ours in 2012 took nearly a year and by the time the bank made a counteroffer the market was moving up! We sweetened the $285k offer to 295 and they gave us 30 days, just like you. But it has worked out to be a good deal, at least for a buy-fix-hold.
- Investor · Fort Lauderdale, FL · Member since 2015 · 172 posts · 30 votes10y
@Steven Gesis, yes sir... it is definitely frustrating, not only for the investor but the homeowner as well. The bank continues to say they never received the documents. They need for us to send new pay stubs... The list just goes on and on... Hopefully we are praying for an answer really soon. So to hear how fast @Nicole Smith received an answer from the bank is amazing.
- Simsbury, CT · Member since 2016 · 22 posts · 1 vote10y
Originally posted by @Wayne Brooks:
@Nicole Smith Take a breath, all is not lost. And ignore everything @Pouyan Broukhim said. A couple of standard things; there is no way your lender should need another 58 days to close. The biggest delay in getting a 203k is getting an Approved contractor with an approved scope of work and price, that fits within the appraisal to be done afterwards. If your lender doesn't already have a couple of approved 203k contractors they've worked with, switch lenders Now. Both agents should have known that you typically do Not get 60-70 days to close after the official shorted bank Approval letter, 30 days is typical. Also, it IS typical for the seller's lender to grant at least one extension for the closing date. I assume your contract specified $4k additional EM upon bank approval? Your contract terms still dictate when you would forfeit this, and your inability to obtain the financing in time would likely mean you get it back. read your contract in detail.
Yes our lender has given us 2 contractors to contact plus a hud inspector. Hopefully we will be able to get an extension.....I think that's our only saving grace. Our realtor is under the impression that banks usually do not grant the extension but we are going to try. March 30th is our lenders earliest possible closing date.
- Simsbury, CT · Member since 2016 · 22 posts · 1 vote10y
I was expecting a few months for the bank to come back.....definitely not a couple weeks! We just need longer then 30 days. I don't understand why we had to fill in terms for closing when they actually don't mean anything. We put 60 days on the offer and had no idea that the bank was allowed to change those terms but still hold us to the rest of the contract. Doesn't make sense to me.
- Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes10y
@Nicole Smith To be clear, the bank isn't changing the terms of the contract, and holding you to it....you can cancel right now if you want to. The bank is simply spelling out the terms they will do the short sale on, on the 30 days is typical, and should have been expected by everyone. One problem with extensions, if the BPO gets to be 90 days old before closing, which it shouldn't in your case, it will expire and the bank will order a new one which will cause a delay, and could result a higher approved price.
- Simsbury, CT · Member since 2016 · 22 posts · 1 vote10y
Originally posted by @Courtney Merricks:
@Steven Gesis, yes sir... it is definitely frustrating, not only for the investor but the homeowner as well. The bank continues to say they never received the documents. They need for us to send new pay stubs... The list just goes on and on... Hopefully we are praying for an answer really soon. So to hear how fast @Nicole Smith received an answer from the bank is amazing.
We are stunned as well. We didn't lowball.....but our offer was less then the asking price. Our realtor and the sellers realtor were completly shocked as well.
- Simsbury, CT · Member since 2016 · 22 posts · 1 vote10y
Originally posted by @Wayne Brooks:
@Nicole Smith To be clear, the bank isn't changing the terms of the contract, and holding you to it....you can cancel right now if you want to. The bank is simply spelling out the terms they will do the short sale on, on the 30 days is typical, and should have been expected by everyone. One problem with extensions, if the BPO gets to be 90 days old before closing, which it shouldn't in your case, it will expire and the bank will order a new one which will cause a delay, and could result a higher approved price.
What is BPO?
- Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes10y
Originally posted by @Nicole Smith:
Originally posted by @Courtney Merricks:
@Steven Gesis, yes sir... it is definitely frustrating, not only for the investor but the homeowner as well. The bank continues to say they never received the documents. They need for us to send new pay stubs... The list just goes on and on... Hopefully we are praying for an answer really soon. So to hear how fast @Nicole Smith received an answer from the bank is amazing.
We are stunned as well. We didn't lowball.....but our offer was less then the asking price. Our realtor and the sellers realtor were completly shocked as well.
Nicole, not about low ball or not, and I know it could be frustrating, and I know you had an "accepted" offer, but in all honesty it does not mean anything, the relators are being very positive and this could be merely due to inexperience in dealing with short sales. I would not waste my time, I would move on and get something you know you can lock in.
- Simsbury, CT · Member since 2016 · 22 posts · 1 vote10y
Originally posted by @Steven Gesis:
Originally posted by @Nicole Smith:
Originally posted by @Courtney Merricks:
@Steven Gesis, yes sir... it is definitely frustrating, not only for the investor but the homeowner as well. The bank continues to say they never received the documents. They need for us to send new pay stubs... The list just goes on and on... Hopefully we are praying for an answer really soon. So to hear how fast @Nicole Smith received an answer from the bank is amazing.
We are stunned as well. We didn't lowball.....but our offer was less then the asking price. Our realtor and the sellers realtor were completly shocked as well.
Nicole, not about low ball or not, and I know it could be frustrating, and I know you had an "accepted" offer, but in all honesty it does not mean anything, the relators are being very positive and this could be merely due to inexperience in dealing with short sales. I would not waste my time, I would move on and get something you know you can lock in.
I don't understand. The seller and the sellers bank have both accepted our offer.....but you are saying that the offer is not actually accepted?
- Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes10y
@Nicole Smith BPO=Broker Price Opinion, a value they get from another real estate agent.
And, to be clear, do you have the actual written Approval Letter, about 5 pages long, from the. Bank, or are you just being told verbally it's approved.
- Simsbury, CT · Member since 2016 · 22 posts · 1 vote10y
Originally posted by @Wayne Brooks:
@Nicole Smith BPO=Broker Price Opinion, a value they get from another real estate agent.
And, to be clear, do you have the actual written Approval Letter, about 5 pages long, from the. Bank, or are you just being told verbally it's approved.
There is one but our realtor is requesting a new one for us. The original that was sent from the bank to the sellers realtor contained a lot of personal information (the sellers) so she legally could not send us that one.
- Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes10y
Originally posted by @Nicole Smith:
Originally posted by @Steven Gesis:
Originally posted by @Nicole Smith:
Originally posted by @Courtney Merricks:
@Steven Gesis, yes sir... it is definitely frustrating, not only for the investor but the homeowner as well. The bank continues to say they never received the documents. They need for us to send new pay stubs... The list just goes on and on... Hopefully we are praying for an answer really soon. So to hear how fast @Nicole Smith received an answer from the bank is amazing.
We are stunned as well. We didn't lowball.....but our offer was less then the asking price. Our realtor and the sellers realtor were completly shocked as well.
Nicole, not about low ball or not, and I know it could be frustrating, and I know you had an "accepted" offer, but in all honesty it does not mean anything, the relators are being very positive and this could be merely due to inexperience in dealing with short sales. I would not waste my time, I would move on and get something you know you can lock in.
I don't understand. The seller and the sellers bank have both accepted our offer.....but you are saying that the offer is not actually accepted?
I am saying that, what you perceive as accepted and the process you will face is unpredictable, it may by miracle close within your allotted time, based on your previous post, the have already pushed the closing and you can expect this to go on for months and months and months at a time. The process can be very painful, as I entwined before, I only speak of my immediate experiences with these, my experience to date has been frustrating and because I am not under a timeline I am ok, with these short-sales floating around for 10-14 months, but in your case I do not think you can do that. They are not easy and they can be an administrative pain, most experienced realtors will tell you the challenges that you will face with a short-sale. I am not saying it is not accepted, I amassing it may take 10-14 moths to actually close.
- Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes10y
@Nicole Smith That's just such BS or incompetence....simply black out any personal info, or not send those pages, and the bank doesn't send out a "redacted" copy for the buyers...how stupid.
- Simsbury, CT · Member since 2016 · 22 posts · 1 vote10y
Originally posted by @Wayne Brooks:
@Nicole Smith That's just such BS or incompetence....simply black out any personal info, or not send those pages, and the bank doesn't send out a "redacted" copy for the buyers...how stupid.
Well I will see what I get when our realtor gets it.
- Simsbury, CT · Member since 2016 · 22 posts · 1 vote10y
Originally posted by @Steven Gesis:
Originally posted by @Nicole Smith:
Originally posted by @Steven Gesis:
Originally posted by @Nicole Smith:
Originally posted by @Courtney Merricks:
@Steven Gesis, yes sir... it is definitely frustrating, not only for the investor but the homeowner as well. The bank continues to say they never received the documents. They need for us to send new pay stubs... The list just goes on and on... Hopefully we are praying for an answer really soon. So to hear how fast @Nicole Smith received an answer from the bank is amazing.
We are stunned as well. We didn't lowball.....but our offer was less then the asking price. Our realtor and the sellers realtor were completly shocked as well.
Nicole, not about low ball or not, and I know it could be frustrating, and I know you had an "accepted" offer, but in all honesty it does not mean anything, the relators are being very positive and this could be merely due to inexperience in dealing with short sales. I would not waste my time, I would move on and get something you know you can lock in.
I don't understand. The seller and the sellers bank have both accepted our offer.....but you are saying that the offer is not actually accepted?
I am saying that, what you perceive as accepted and the process you will face is unpredictable, it may by miracle close within your allotted time, based on your previous post, the have already pushed the closing and you can expect this to go on for months and months and months at a time. The process can be very painful, as I entwined before, I only speak of my immediate experiences with these, my experience to date has been frustrating and because I am not under a timeline I am ok, with these short-sales floating around for 10-14 months, but in your case I do not think you can do that. They are not easy and they can be an administrative pain, most experienced realtors will tell you the challenges that you will face with a short-sale. I am not saying it is not accepted, I amassing it may take 10-14 moths to actually close.
We haven't pushed the closing date as of yet. We are in the process of filing an extension that asks for the closing to be pushed from March 4th to March 30th. The sellers bank wants to close on the 4th and our lender wants to close the 30th. If they deny our request then the deal is done. We won't be able to secure our funding by March 4th.
We were advised multiple times that there could be an extremely long waiting period to hear anything back from the bank but not much about hold ups after the bank accepts. What sort of hold ups can we expect? Will they be a result of our lender? Or the sellers bank?
- Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes10y
Originally posted by @Nicole Smith:
Originally posted by @Steven Gesis:
Originally posted by @Nicole Smith:
Originally posted by @Steven Gesis:
Originally posted by @Nicole Smith:
Originally posted by @Courtney Merricks:
@Steven Gesis, yes sir... it is definitely frustrating, not only for the investor but the homeowner as well. The bank continues to say they never received the documents. They need for us to send new pay stubs... The list just goes on and on... Hopefully we are praying for an answer really soon. So to hear how fast @Nicole Smith received an answer from the bank is amazing.
We are stunned as well. We didn't lowball.....but our offer was less then the asking price. Our realtor and the sellers realtor were completly shocked as well.
Nicole, not about low ball or not, and I know it could be frustrating, and I know you had an "accepted" offer, but in all honesty it does not mean anything, the relators are being very positive and this could be merely due to inexperience in dealing with short sales. I would not waste my time, I would move on and get something you know you can lock in.
I don't understand. The seller and the sellers bank have both accepted our offer.....but you are saying that the offer is not actually accepted?
I am saying that, what you perceive as accepted and the process you will face is unpredictable, it may by miracle close within your allotted time, based on your previous post, the have already pushed the closing and you can expect this to go on for months and months and months at a time. The process can be very painful, as I entwined before, I only speak of my immediate experiences with these, my experience to date has been frustrating and because I am not under a timeline I am ok, with these short-sales floating around for 10-14 months, but in your case I do not think you can do that. They are not easy and they can be an administrative pain, most experienced realtors will tell you the challenges that you will face with a short-sale. I am not saying it is not accepted, I amassing it may take 10-14 moths to actually close.
We haven't pushed the closing date as of yet. We are in the process of filing an extension that asks for the closing to be pushed from March 4th to March 30th. The sellers bank wants to close on the 4th and our lender wants to close the 30th. If they deny our request then the deal is done. We won't be able to secure our funding by March 4th.
We were advised multiple times that there could be an extremely long waiting period to hear anything back from the bank but not much about hold ups after the bank accepts. What sort of hold ups can we expect? Will they be a result of our lender? Or the sellers bank?
Normally, the hold-up is by the seller. I ave had dozens of accepted short sales by lenders, only a handful ever came to fruition and it took 10-14 months in some cases. The hold-up will not be on your side based on the information you have provided. Its up to you, but I would steer clear.
- Simsbury, CT · Member since 2016 · 22 posts · 1 vote10y
Originally posted by @Steven Gesis:
Originally posted by @Nicole Smith:
Originally posted by @Steven Gesis:
Originally posted by @Nicole Smith:
Originally posted by @Steven Gesis:
Originally posted by @Nicole Smith:
Originally posted by @Courtney Merricks:
@Steven Gesis, yes sir... it is definitely frustrating, not only for the investor but the homeowner as well. The bank continues to say they never received the documents. They need for us to send new pay stubs... The list just goes on and on... Hopefully we are praying for an answer really soon. So to hear how fast @Nicole Smith received an answer from the bank is amazing.
We are stunned as well. We didn't lowball.....but our offer was less then the asking price. Our realtor and the sellers realtor were completly shocked as well.
Nicole, not about low ball or not, and I know it could be frustrating, and I know you had an "accepted" offer, but in all honesty it does not mean anything, the relators are being very positive and this could be merely due to inexperience in dealing with short sales. I would not waste my time, I would move on and get something you know you can lock in.
I don't understand. The seller and the sellers bank have both accepted our offer.....but you are saying that the offer is not actually accepted?
I am saying that, what you perceive as accepted and the process you will face is unpredictable, it may by miracle close within your allotted time, based on your previous post, the have already pushed the closing and you can expect this to go on for months and months and months at a time. The process can be very painful, as I entwined before, I only speak of my immediate experiences with these, my experience to date has been frustrating and because I am not under a timeline I am ok, with these short-sales floating around for 10-14 months, but in your case I do not think you can do that. They are not easy and they can be an administrative pain, most experienced realtors will tell you the challenges that you will face with a short-sale. I am not saying it is not accepted, I amassing it may take 10-14 moths to actually close.
We haven't pushed the closing date as of yet. We are in the process of filing an extension that asks for the closing to be pushed from March 4th to March 30th. The sellers bank wants to close on the 4th and our lender wants to close the 30th. If they deny our request then the deal is done. We won't be able to secure our funding by March 4th.
We were advised multiple times that there could be an extremely long waiting period to hear anything back from the bank but not much about hold ups after the bank accepts. What sort of hold ups can we expect? Will they be a result of our lender? Or the sellers bank?
Normally, the hold-up is by the seller. I ave had dozens of accepted short sales by lenders, only a handful ever came to fruition and it took 10-14 months in some cases. The hold-up will not be on your side based on the information you have provided. Its up to you, but I would steer clear.
Oh ok I see. I think we are going to hang in there for a bit and see how it starts to pan out (if the bank agrees to extend closing) we are not in a huge rush.....we never expected to close until much later in the year anyways. I don't believe the actual seller will hold anything up. We have met her and she's as sweet as pie. Her husband left her and she just can't afford the house on her own. If you meant her bank could hold it up then obviously there is nothing we could do about it. Unfortunately the market here right now is dead and there isn't a single other house in our town and price range that we are interested in. If it doesn't close in March or early April then we could back out then and hopefully there will be more available inventory.
- Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes10y
@Nicole Smith Just so you know, as for getting an extension, the seller's lender usually won't grant the extension until you are within 7 days of the closing date, so it's not likely you'll get the extension now, but that doesn't mean much.. Read your contract to see Exactly when is the latest date you can back out due to financing not being approved, and get your money back...best advice I can give you.
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