Short sale

5 Replies

Last week I saw and made an offer on a house built in 1960 that had been on market 73 days. It had been listed originally at 167K, then reduced and relisted 152K, the blurb reading "possible short sale". I took of the 30%, then guestimate repairs at 25 to 30K and offered $90.

They have till tomorrow, but my agent just called and said she had talked to seller's agent and they want another week. I asked what the mortgage was, because the short sale means the bank will accept less that the mortgage owed.

My agent said there's more to it than that--agent commissions, taxes, and other things, and I kept saying, "the description of a short sale is less than is owed on the mortgage." She said she'd call the agent to ask, but didn't expect an answer, and called back immediately to say the mortgage owed is 158000. How can that be?

They bought it in 2002 for $68,498 according to county records, and EVEN if they got a second mortgage, a lender wouldn't loan that almost whole amount again, would it?

What percentage would a lender normally loan on a house that has almost no owner equity?

Based on the above, what is the most likely amount the seller received on a second mortgage and the total he still owes--assuming that he paid little off the principal from 2002 to now and did get the highest amount possible in a second mortgage?

I just can't believe that he would would have been loaned 89000 on top of his purchase price. Solds in this area are in $150-180000 range
What do you think?
Thanks
ofgift

I think it is quite possible. I had a short in January that I listed. The lender gave the sellers 164,000.00 for a first. The property closed at 105,000.00 and the lender is going after the mortgage broker for fraud. The woman had a payment that was 85% of her monthly gross income.

Could have been refinanced after doing some significant repairs or improvements. If there were comps in the 150-180 range, it would have been pretty easy to have an appraisal for a refi come out at the high end. A 90% owner occupied refi would have been for $162, and now is down to the $158 you list.

A home equity loan could have the same effect.

Depending on where you are, you might find the info on what deeds of trust or mortgages are on the property in the online public records. Probably find it at the court house for sure.

Thanks. Another question:
The seller wants two more weeks--says the banker needs the time, or, they need the time to make contact with banker/lender.
_I_ think they're hoping for another, better offer, and are keeping me waiting in the wings, unable to do anything else.
They have had no other offers since I made mine a week ago.

How can I keep this offer active and still make an offer someplace else? Tomorrow I will have to sign a paper giving them them more time. Can I put in that offer that _I_ can get my ernest money back and walk away at any time?
How would I word that?
Yes, you can have until June 10 to decide, but if I find another place before that, you return my money and this deal is off...?
What is the LEGAL way to say that?
ofgift

Short sales always take a lot of time for the lender to accept. THey have to run the offer through a couple of layers of desks. If the seller has signed the contract then you have the only contract. On the exact wording to be able to get out if find something differant check with your realtor but on short sales alot of the time you have to wait up to a month to get the ok to close and then they want it done ASAP.

Originally posted by "Ohio Realtor":
If the seller has signed the contract then you have the only contract. On the exact wording to be able to get out if find something differant check with your realtor but on short sales alot of the time you have to wait up to a month to get the ok to close and then they want it done ASAP.

My agent said it will be today (fri) that I sign the extension papers. In talking with her a few other questions come up.
I've had a good relationship with this woman for over 10 years, when she helped me get this house (my residence). She has been an agent for a long time, and generally operating in the upper levels of the market. According to her she's working with me because of our history. (Sounds good even if it's not in fact, true, lol.)
In the instance of this short sale, however, she didn't know the definition of a short sale. She said it meant that the closing occurred before the date on the contract.
I asked her, as you suggested, if the seller had signed the contract. She said no, the bank had to agree to sell first. Is that true? Doesn't the contract have to be signed to present it to the lender?
I asked her what the mortgage amount is, she said there's no way of knowing. I said "It's a short sale--the bank agrees to take less than what is owed on the mortgage, so a buyer would have to know that amount to do a short sale."
She said "I'll call the seller agent but she won't tell me. Since I'm (myagent) not getting anyplace with you, I'll call and ask." She called me back amazed, told me the seller agent said the mortgage is 158K and said she (my agent ) would never divulge that info. I said that's what a short sale is, so you would have to.
Then she said she's done many short sales over the years, and was never asked the mtg amount.
Now I feel she's being less than honest with me. I've never felt that about her previously.
I know there's a question there somewhere but I'm not sure what it is.
Is she embarrassed that I, who knows nothing, knew about this short sale and she didn't, is she outright lying, or what? Can I trust her to be working for me (as well of course, for herself--herself being first) from this point out?
I also don't know that I believe that 158 is the true mortgage amount...