Buying a short sale-advice needed!
Simsbury, CT · Member since 2016 · 22 posts · 1 vote
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?
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.
@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.
Ok great, much luck to you, the ultimate decision sits with the lender, the seller normally wants out and is prepared to accept an offer, the question is if her lender is accepting to the final conditions and terms.
@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.
I was worried about that. That really sucks. You would think the bank would prefer knowing upfront wether or not we can work in the time frame. If they deny the request then we just have to pull the plug. I'm not paying for appraisals, inspections and the hud consultant and all that knowing that they still want to close on the 4th.
That's what I thought, which is why I was surprised to see you write earlier: "Normally, the hold-up is by the seller. I have had dozens of accepted short sales by lenders, only a handful ever came to fruition and it took 10-14 months in some cases".
Steven, did I miss something?