Foreclosure and short sale sellers are desperate, right?

I purchased a short sale, with about 4 months of waiting... but the house was what I was looking for and I got about a 10-15% haircut.

I found the biggest aggrevation was waiting, it always took two weeks to get any answer from anyone.

I believe it would have been even worse if the seller was not filing for bankruptcy (which he withdrew as soon as we closed)

I don't think short sales or foreclosures are good deals, frankly.

That's a myth that people who don't know much about real estate tend to buy. Is it possible? Sure. Is it likely? No, for structural reasons that have been previously discussed.

Much better to buy from the banks when the property is in REO, title is clear, and banks are anxious too dump it. Less hassle, and usually cheaper.

We looked at lots of foreclosures in Dorchester and Roxbury. We saw a tremendous amount of overpriced junk in terrible condition. But we also found the place we just moved into, a gorgeous two-family that needed some rehab but nothing too outrageous. The owner's unit was near move-in condition (we are living here while we do some cosmetics) and the rehab to the rental unit is not too much more than some new floors, paint and appliances. When I tell people how much we paid, jaws drop--it was a 55% discount from its most recent sale price and considerably cheaper than some of the condos next door.

Did we get a screaming deal? Probably not--I expect that the other overpriced place around our neighborhood will continue to fall until they are more in line with ours. We could probably flip this for $50k after the renovations are complete, but we love the place. But we got a much better deal than anything else currently on the market.

On the down side, the sale process was absolutely miserable. Terrible communication with the seller's agent and the selling bank, blown deadlines, title problems, several missed closing dates, and mountains of stress. Buying a foreclosure is definitely not for the faint of heart.

The lesson here is that foreclosures are just like any other deal. You need to look at a lot of rocks before you find a gem, and you need to be ready to roll with the punches. But if you're persistent, you very well may end up with something great--we did!

So if I'm looking to buy toward the very end of the year or the beginning of next year, how much time should I give myself from the point of finding a bank owned property and closing on it (understand it's going to be a range?)

I'm a first time buyer who isn't in a rush and can wait as long as he needs to for the right deal in Charlestown or South Boston. I'm not naive enough to think I can time the market perfectly, but feel that the economic conditions over the next six months will worsen and further depress prices.

Also, where is a good place to find a list of agents with significant experience in this area?

Thanks

Short sales are fine, they just take longer. Personally I like to buy directly from HUD, IRS, FDIC, and FSBO's so I can avoid paying realtor's fees for service that adds no value.

Jeff: If you are looking in Charlestown, you should work with Joe McGonagle at Century 21 on Main Street. He has been there forever and knows everything about the place. Good luck!!

I purchased a short sale recently that looked really good. When I viewed the place, all units were rented and I was going to have positive cash flow of about $1K per month (conservative number). There were renovations to be done but nothing I could not handle with a good contractor and all cosmetic for the most part. I made an offer of $340K in early December when they were asking for $399K which was reduced from $450K. I ended up closing in mid May after expecting to close around Feb. I waited about 1 month for an answer from the bank and spend hours and hours on the phone trying to get a loan. I spoke to 3 different lenders and there were title issues and repair issues etc. To make things even more interesting, the seller's agent had not closed on a place before and she did not get the final water reading. I finally put my foot down and we closed the evening before I had to get on a plane. I closed and ran to the airport. I made the flight. Fast forward to August, just a couple months later, the second floor tenant had moved out before I closed, the 3rd floor tenant died and I only discovered this because there was a stench upstairs, I am out $1K for the Sept rent since you can't very well ask a dead guy to pay you the rent and you can't take him to court.

In short, I got a good deal but I am certainly paying for it now. I expect this to level out and become profitable in the long-run. Anyone know someone looking for a 4 BR?

The time it takes for a short sale IS RIDICULOUS..........I am trying to short sale my home. The lender Countrywide has taken their sweet time on my sale. I had 3 more than qualified buyers put in offers. One offer was the asking price. All 3 buyers have walked away... Just yesterday I get a letter from Countrywide indicating that they can not assist me in a work out/short sale. The reason was, and get this; "I no longer have a buyer to complete the short sale payoff process".

I am an attorney and I used to work for a foreclosure factory type firm but I quit because I couldn't stomach it anymore. The bottom line is that banks have absolutely no interest in helping people salvage equity or minimize losses by assisting them in a short sale. They drag out the process for months until the prospective buyers inevitably lose interest in the deal. Most of these banks seem desperate to avoid helping people short sell because they want to delay taking losses on their books.

It's a joke and it is absolutely CRIMINAL what banks are doing to these homeowners. I'm not in a position to do anything about it, but people would be up in arms about this if they knew the truth. Unfortunately, like most things, this will be swept under the rug. We should really hold these banks accountable since they ALL wanted to talk to you when it came to obtaining a loan - but now that borrowers are struggling, they have no interest in helping what should be a win-win situation. Big banks are ruthless, brutal and incompetent - bottom line.

I also recently bought a short sale. We actually offered $4,100 OVER the asking price. Having looked at approx. 100 houses since Early March, we felt that pricing the house at what we thought the house was worth and winning the bid (there was another bid on the house that turned out to be lower than the asking price) was the correct action to take opposed to try and 'get a steal'.

But don't get me wrong, the price had dropped several times and we got it at 35% off its original asking price (which was way over inflated). When the house was assessed by the bank, we basically got about 1.25% equity (from the assessed value to what we paid).

Similar to most experiences, we waited to hear from the bank for about a month and a half after we placed the bid, but when we won it, we had to move fast!

My advise to anyone buying a short sale/ foreclosed home, have your team in place. I had my real estate agent, mortgage broker and attorney all set to go. Once the bank called to tell us we had won the bid, we were only given 2 WEEKS to close. Again, similar to most experiences, there is very slow communication from the sellers, multiple banks, other attorney's, a murky house history..... My team was amazing at being the squeaky wheel that got the oil in order to meet our 2 week deadline, which we (11th hour) did.

Also, don't skimp out on the title insurance. Given that the house is currently under finncial distress, it is highly possible that someone could place a lien on your house (post sale) without you know it. My attorney and his employer both own multiple houses and they both have title insurance on all of the houses. I sleep better at night knowing that the equity in my house will always belong to me.

Patience, flexibility, and persistance all qualities needed for this type of sale. So far, the house has been spectacular and certainly worth the experience.

we bought a short sale in June, and it has been a HUGE headache from the time the ink dried!
we negotiated $9,000 less than asking price but hte house needs a lot of work that we didn't expect. the sellers must have had some major air fresheners whenever we went to look at te house becasue after closing there was a stink that we couldn't get rid of - we had to tear up all the carpets. the pool was rotted, but when we called the realtor she said that it was sold in working condition & is an"extra". yeah the pump worked, but the frame & ladder were no good so that was torn out and removed.
the sellers left the garage & driveway full of trash which cost us hundreds of dollars to have removed.
and the list goes on & on
my advice is to have your eyes open very wide when looking at short sales & foreclosures. they can be more work than the savings

ChiliPepr, it must have taken up all your time - you've disappeared off the message boards!

I would never have the patience to deal with a lender on a sale - as an agent or as a buyer.

To those that can and do and get good deals, all the more power to you.

How does one judge whether a short sale is a bargain when prices of some properties are based on the peak prices from 2005-2006? Has the notion occurred to buyers that maybe getting 20-25% less from peak market price isn't really that much of a bargain because that 20-25% discount is just the reality of the market in 2008? That 25% bargain is only a bargain if home prices go back peak prices, which may not happen in a very long time.

This then leads to the another problem: what are new measurements that can gauge whether a short sale is worth the price, time, and effort?

kyle - good thoughts. To be worth the effort, a short sale should be priced noticeably lower than current pricing. As you note, that's rarely the case - 20% off already feels like a big haircut to the banks, the 40% off that might be necessary is unlikely to be approved.

My guess is that most people who buy short and foreclosure (foreclosure is even worse, since the bank will likely bid the note) are getting a classic false bargain - 25% off a price that is 50% too high.

Most people would never be taken in by that if a store did it, but in the housing market seem to put all ability to analyze aside - it's "home" after all. Not the biggest investment that most will make..... Irony strongly intended.

I'm an agent and, like most nowadays, have been doing short-sale deals. I just had one fall apart after 4.5 months because the second bank wouldn't respond to the offer; the first bank got sick of waiting and is proceeding with foreclosure. I had another one where, despite a full-price offer, the bank *after 6 weeks* countered with a price $20K higher than they had been asking (the buyers said no). I had one close after almost 120 days and thought that was horrible, but now look back on that as a great experience.

Other agents are dealing with the same nonsense. I understand that some owners are trying to scam their way out of their mortgage and the banks have to be careful about that, but I don't see the banks doing anything to help ease the situation. Certainly dragging out the short-sale process until the buyers go away doesn't help, and letting a property deteriorate until it's not livable is criminal.

Beware if you're looking at these properties this fall - and if you make an offer on a place see what you can do to turn the water off.

I just bought a foreclosure in Wakefield for 285,000 that last sold in 2005 for 389,000. It needs a lot of cosmetics, but its basically in good shape and I think we got a pretty good deal. Our realtor said our deal went about as smooth as any foreclosure he's seen - only took a month and a half from offer to close.

In my experience, listing agents that retain an attorney to deal directly with lenders on short sales see the wait time for lender approval cut by about 50 percent.

I was a buyer in a short sale and today I got news the deal is off and the house is going into foreclosure. I paid for a home inspection and an attorney to review the P&S. (Wells Fargo was the Seller's lender.) Any advice for me? I really love the house and still want it.
Thanks for reading....