My Experience Purchasing My First Property Via Shortsale With Nothing

I graduated college in 2008 and moved back to Venice, Florida where I was born and raised to work in the family business. I realized quickly that Sarasota had a lot more to do for people my age and moved up there to live with a few friends. I lived in a 4br/3ba house right in the middle of Sarasota and payed $300 a month to rent one of the rooms, all inclusive. It was great for a few years, until Summer of 2011 when my friends parents were trying to short sale the house and we were notified that we had to leave. I was sad but I started thinking about the short sale process, so I did some research. I found that there were a lot of short sales in the area and there may be an opportunity to get a good deal. I wanted to buy a home but I didn't want the mortgage and I didn't want to have to deal with friends that would be roommates or random tenants so I looked for single family properties that had multiple units. I can't say much skill was involved, I went on the MLS sites (I prefer myfloridahomesmls.com) and looked for places less than $150,000 and the key words such as "detached unit", "mother in law suite", etc. and that's when I saw it, the very first one I saw, less than a mile away from where I was living at the time. I called a realtor/broker friend that I recently met in the community that specialized in short sales for some advice and we went to take a look at it. It was a short sale and there was a young family that currently lived there. 

The first house I looked at was originally bought in 2007 for $270,000. It was a 1,200 sq. ft. 3br/2ba 1957 cottage style wood frame house with a 900 sq. ft. detached garage that was converted into a dance studio and a mother in law suite upstairs with a screened balcony. It was perfect! The house was listed for $150,000 and I wasn't sure I could even get financing but decided to try. I had no debt and made about $50,000 a year but also had about $2,500 in my bank account. I wasn't sure I could get financing but I knew that I have been contributing to our company IRA that matched me up 3% of my paycheck since moving back from college in 2008 and found that I had close to $6,000 in it. I was able to pull that money out for my first home purchase for no fee and I was approved for an FHA loan! That's where the fun began....

The young family was short selling the house because they were going through a nasty divorce and their house was now appraised by the county for about $100,000. I put an offer in at $125,000 and they accepted. Little did I know that meant nothing at all but it did let me go into a contract on the property. So I ordered an inspection and began my due diligence. The inspection went well. Then the sellers bank appraisal came in at $165,000 and my banks appraisal came in at $93,000. I started freaking out! How can there be such a large discrepancy in price? All of this was going on for about 5 months and I was on the verge of going crazy. My realtor/broker was trying everything to reassure me that it was okay but it did not make sense. Finally, after months of it sitting in limbo we received the phone call. The sellers bank accepted the offer at $93,000 and we went to closing. At closing, I heard that the bank was trying to call and cancel it but we signed the papers and the house was mine. A week or two later representative of the sellers bank were trying to serve foreclosure papers on the house. I refused to take them and they finally just went away and I haven't heard anything since.

The whole process took about 7 months from beginning to end. In the end, it was worth it but it could have went many different ways. I hope you enjoyed my story and please share any thoughts that you may have!