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Author Topic: Short sales  (Read 1411 times)

Coleman

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Short sales
« on: February 13, 2020, 02:22:43 PM »
My wife and I found a house we love. It is a short sale. Our realtor said it may be complicated.

Anyone ever done one of these? Any tips?

jsglow

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Re: Short sales
« Reply #1 on: February 13, 2020, 03:21:08 PM »
Feel free to PM me Coleman.  I'd need more details to give you sound advice.

Benny B

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Re: Short sales
« Reply #2 on: February 13, 2020, 10:53:15 PM »
Depends on whether it’s actually a short sale or a foreclosure sale. 

If the latter, it can be varyingly complicated depending on where it is in the foreclosure process.  If the former, it could be as simple as the added step of getting the bank to sign off on the contract.

Either way, make sure you have an attorney read the contract.  A lot of these loans end up with mortgage servicers who have notoriously one-sided sale contracts.  When we were in the market in 2010, my wife and I actually saw a contract (from a nationally known lender) that said the seller has the right to cancel the contract at any time and for any reason... which wouldn’t have been too terrible if not for the fact that earlier in the contract, it said that the earnest money would be forfeited if the contract is cancelled at any time or for any reason whatsoever.
Wow, I'm very concerned for Benny.  Being able to mimic Myron Medcalf's writing so closely implies an oncoming case of dementia.

Lighthouse 84

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Re: Short sales
« Reply #3 on: February 14, 2020, 08:39:17 AM »
I'm a real estate lawyer and have done many short sales.  The biggest piece of advice I'll give you is, be patient.  It's a process and typically takes longer than everyone hopes.
HILLTOP SENIOR SURVEY from 1984 Yearbook: 
Favorite Drinking Establishment:

1. The Avalanche.              7. Major Goolsby's.
2. The Gym.                      8. Park Avenue.
3. The Ardmore.                 9. Mugrack.
4. O'Donohues.                 10. Lighthouse.
5. O'Pagets.
6. Hagerty's.

jsglow

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Re: Short sales
« Reply #4 on: February 14, 2020, 08:52:59 AM »
I'm a real estate lawyer and have done many short sales.  The biggest piece of advice I'll give you is, be patient.  It's a process and typically takes longer than everyone hopes.

And absolutely be represented by counsel.

Benny B

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Re: Short sales
« Reply #5 on: February 14, 2020, 09:33:27 AM »
And absolutely be represented by counsel.

Coleman: Take Note... all three respondents have said "get an attorney."  (Litehouse didn't say it explicitly, but saying "Imma lawyer" is code for "get an attorney.")

While I respect the role that real estate agents play, I have yet to run across a residential agent who has their JD.  Don't listen to a Realtor tell you how many short sales they've closed... ask them how many didn't.

My wife and I made offers on 14 different homes back in 2010.  If you insist on going at it alone, the best "advice" I can give is to dig up some of the old short-sale & pre-foreclosure contracts/addenda that were submitted to us... once you see them, you'll agree that you need an attorney.

Nevertheless, just to be clear.... GET AN ATTORNEY
Wow, I'm very concerned for Benny.  Being able to mimic Myron Medcalf's writing so closely implies an oncoming case of dementia.

Coleman

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Re: Short sales
« Reply #6 on: February 14, 2020, 10:12:18 AM »
Thanks for responses everyone. More details...

We will definitely need the equity from our current home for the down payment. We didn't even list on MLS, our realtor did a pocket listing a week ago and we immediately got a bunch of bites. We have a full price offer on our place, but they are refusing to do any longer out than a 6 week close. All signs point to a short sale taking much longer than this so we will be living with my in-laws for at the very least 2 weeks, potentially a couple months. I have mixed feelings on that....although I realize I am lucky I have the option.

It is a true short sale, not a foreclosure. So my understanding is we just need the bank's approval of the price. What happens if they reject it? Do we have to start all over?

We definitely plan to have an attorney. It is par for the course in Illinois. We had an attorney when we bought this place, and that was just a regular sale.

I'm a bit stressed. We have a six week old baby and while we both WANT to move out to the suburbs into a single family home from our city condo, this is all moving fast and we thought we'd have more time to look. My wife just loves this house.


Lighthouse 84

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Re: Short sales
« Reply #7 on: February 14, 2020, 10:24:06 AM »
Thanks for responses everyone. More details...

We will definitely need the equity from our current home for the down payment. We didn't even list on MLS, our realtor did a pocket listing a week ago and we immediately got a bunch of bites. We have a full price offer on our place, but they are refusing to do any longer out than a 6 week close. All signs point to a short sale taking much longer than this so we will be living with my in-laws for at the very least 2 weeks, potentially a couple months. I have mixed feelings on that....although I realize I am lucky I have the option.

It is a true short sale, not a foreclosure. So my understanding is we just need the bank's approval of the price. What happens if they reject it? Do we have to start all over?

We definitely plan to have an attorney. It is par for the course in Illinois. We had an attorney when we bought this place, and that was just a regular sale.

I'm a bit stressed. We have a six week old baby and while we both WANT to move out to the suburbs into a single family home from our city condo, this is all moving fast and we thought we'd have more time to look. My wife just loves this house.
If the seller's bank rejects the price, they'll typically give the seller their bottom line as to what the bank has to net.  But then again, sometimes they won't give their bottom line net.  Assuming you agree to the increased price and depending on the bank, it could be as simple as resubmitting the contract to the seller's lender to get final approval or they make the seller resubmit the entire package and start over.  My experience with short sale lenders is that many times, the entire package is submitted to the short sale lender, you expect to hear from them, and when you don't, you contact them only to be told they didn't get it.  The package is resubmitted, and then they say they only got part of it, so the whole thing has to be resubmitted.  It happens less than it used to, but still does happen.  See if you can find out where the seller is in the process to give you a better indication as to the timing. 
HILLTOP SENIOR SURVEY from 1984 Yearbook: 
Favorite Drinking Establishment:

1. The Avalanche.              7. Major Goolsby's.
2. The Gym.                      8. Park Avenue.
3. The Ardmore.                 9. Mugrack.
4. O'Donohues.                 10. Lighthouse.
5. O'Pagets.
6. Hagerty's.

Coleman

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Re: Short sales
« Reply #8 on: February 14, 2020, 10:31:13 AM »
If the seller's bank rejects the price, they'll typically give the seller their bottom line as to what the bank has to net.  But then again, sometimes they won't give their bottom line net.  Assuming you agree to the increased price and depending on the bank, it could be as simple as resubmitting the contract to the seller's lender to get final approval or they make the seller resubmit the entire package and start over.  My experience with short sale lenders is that many times, the entire package is submitted to the short sale lender, you expect to hear from them, and when you don't, you contact them only to be told they didn't get it.  The package is resubmitted, and then they say they only got part of it, so the whole thing has to be resubmitted.  It happens less than it used to, but still does happen.  See if you can find out where the seller is in the process to give you a better indication as to the timing.

All I know is that house did briefly go under contract in January, but after a week it was back on the market. Our realtor thinks the buyers just found another house and walked away. It did not get far enough into the process to get the bank's approval of the price or the bank's bottom line.

Benny B

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Re: Short sales
« Reply #9 on: February 14, 2020, 11:32:52 AM »
Out of curiosity, what suburb and/or did your agent give you any insight on the number of short sale/foreclosure listings in the immediate area (relative to other areas)?
Wow, I'm very concerned for Benny.  Being able to mimic Myron Medcalf's writing so closely implies an oncoming case of dementia.

Coleman

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Re: Short sales
« Reply #10 on: February 14, 2020, 11:36:02 AM »
Out of curiosity, what suburb and/or did your agent give you any insight on the number of short sale/foreclosure listings in the immediate area (relative to other areas)?

Libertyville IL. There are a fair number of short sales and foreclosures. Inventory (at least In our price range) is very, very tight.

Other info that may or may not be relevant: house is currently vacant, owners were trying to rent it prior to listing it in December
« Last Edit: February 14, 2020, 11:46:51 AM by Coleman »

jsglow

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Re: Short sales
« Reply #11 on: February 14, 2020, 11:38:20 AM »
Couple things Coleman.  A six week close on your condo is fast.  Although for a full price cash offer I might be so inclined.  You had multiple offers right away through a pocket listing?  Consider that you might be priced too low.  Not saying anything for sure.  Just think about it and study your comps as best as you can.

Secondly, understand that the short bank is under zero obligation to negotiate with you or even their borrower.  Their client contractually owes principal, interest and fees on their loan, not some arbitrary compromised amount.  A prudent banker will evaluate his ability to collect on that via all means available to him.  He will also likely expect 'fair market value' for the house in order to agree to release his lien.  He doesn't do a release for $200k if the house is worth $350k and he's owed $375k.  Well, unless he's an idiot in which case he should have hired me to handle this for him.

It 'can' happen quickly and somewhat normally.  Just know that there's a critical decision maker not named 'current owner'.

Good luck. 
« Last Edit: February 14, 2020, 11:47:51 AM by jsglow »

Coleman

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Re: Short sales
« Reply #12 on: February 14, 2020, 11:44:21 AM »
Couple things Coleman.  A six week close on your house is fast.  Although for a full price cash offer I might be so inclined.  You had multiple offers right away through a pocket listing?  Consider that you might be priced too low.  Not saying anything for sure.  Just think about it and study your comps as best as you can.

Secondly, understand that the short bank is under zero obligation to negotiate with you or even their borrower.  Their client contractually owes principal, interest and fees on their loan, not some arbitrary compromised amount.  A prudent banker will evaluate his ability to collect on that via all means available to him.  He will also likely expect 'fair market value' for the house in order to agree to release his lien.  He doesn't do a release for $200k if the house is worth $350k and he's owed $375k.  Well, unless he's an idiot in which case he should have hired me to handle this for him.

It 'can' happen quickly and somewhat normally.  Just know that there's a critical decision maker not named 'current owner'.

Good luck.

Yeah the six week close is giving me a bit of heartburn. They are currently renting and their lease is up at the end of March. I get it, but not sure I necessarily need to bend over backwards for them.

To be clear, we only had one offer through a pocket listing, which went up a week ago. We got the offer last night.  We had seven showings though and four of those said they really liked it/were interested.

It is not a full cash offer. But it is a full price offer and 20% cash down.

I agree with your sentiments on pricing. I think we are in the drivers seat and our realtor said if we formally list and have a couple open houses we will be under contract within a week or two. It is a hot condo market in Chicago and we have a three bedroom that is near the bottom of the market in price in our neighborhood (375k in lakeview). Building is a bit old but our unit was rehabbed ten years ago and overall in good condition.

I’m inclined to respond to the offer with “8 week close, take it or leave it”
« Last Edit: February 14, 2020, 11:46:20 AM by Coleman »

jsglow

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Re: Short sales
« Reply #13 on: February 14, 2020, 11:50:31 AM »
And your wife is 'in love' with this particular new house why exactly?

Fluffy Blue Monster

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Re: Short sales
« Reply #14 on: February 14, 2020, 11:52:09 AM »
Worse comes to worse, selling your place and moving in with the in-laws for a short time isn't the worst thing in the world even if the house you want falls through.  Having no place to sell obviously would give you a ton of leverage.
“True patriotism hates injustice in its own land more than anywhere else.”  -Clarence Darrow

jsglow

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Re: Short sales
« Reply #15 on: February 14, 2020, 11:52:54 AM »
Worse comes to worse, selling your place and moving in with the in-laws for a short time isn't the worst thing in the world even if the house you want falls through.  Having no place to sell obviously would give you a ton of leverage.

Yep.

Coleman

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Re: Short sales
« Reply #16 on: February 14, 2020, 11:55:45 AM »
And your wife is 'in love' with this particular new house why exactly?

It’s massive. 3000 sq ft, 4 bed, 3 bath, tall ceilings, big fenced in yard, beautiful kitchen, close to both of our work.

Checks most of our boxes. Listed for only $400k but that makes me question whether the bank will approve

jsglow

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Re: Short sales
« Reply #17 on: February 14, 2020, 12:16:33 PM »
Oh, and hearty congratulations on the newborn!  Not like you have anything going on these days!

Coleman

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Re: Short sales
« Reply #18 on: February 14, 2020, 12:29:20 PM »
Oh, and hearty congratulations on the newborn!  Not like you have anything going on these days!

Thank you! Life is crazy and stressful. But it is important to remember I am blessed

Benny B

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Re: Short sales
« Reply #19 on: February 14, 2020, 12:48:17 PM »
It’s massive. 3000 sq ft, 4 bed, 3 bath, tall ceilings, big fenced in yard, beautiful kitchen, close to both of our work.

Checks most of our boxes. Listed for only $400k but that makes me question whether the bank will approve

Wow.  No brainer.  Libertyville for $400k - provided the house has good bones - go live with your in-laws as long as you have to.

Are you absolutely sure the house is a short-sale?  I know that many people (Realtors included) see "As-Is" in the listing and immediately assume it's a short sale, but this one could be a trust or probate sale.  You can pull up the property history at: http://www.tax.lakecountyil.gov/search/commonsearch.aspx?mode=realprop

If you really like the home and want to dig into the background a little further, take a lunch break in Waukegan and go pull the loan recorded on the property.  If it is a short sale, sometimes you can back into exactly what the outstanding balance is.

We had a second child and bought a home inside a 90-day period.  When it comes to things that are going to keep you up at night, you might as well lump them into the tightest window possible.
Wow, I'm very concerned for Benny.  Being able to mimic Myron Medcalf's writing so closely implies an oncoming case of dementia.

Lighthouse 84

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Re: Short sales
« Reply #20 on: February 14, 2020, 12:52:21 PM »
Wow.  No brainer.  Libertyville for $400k - provided the house has good bones - go live with your in-laws as long as you have to.

Are you absolutely sure the house is a short-sale?  I know that many people (Realtors included) see "As-Is" in the listing and immediately assume it's a short sale, but this one could be a trust or probate sale.  You can pull up the property history at: http://www.tax.lakecountyil.gov/search/commonsearch.aspx?mode=realprop

If you really like the home and want to dig into the background a little further, take a lunch break in Waukegan and go pull the loan recorded on the property.  If it is a short sale, sometimes you can back into exactly what the outstanding balance is.

We had a second child and bought a home inside a 90-day period.  When it comes to things that are going to keep you up at night, you might as well lump them into the tightest window possible.
Better yet, PM me the address and I'll get you the Seller's original mortgage info in a few minutes.
HILLTOP SENIOR SURVEY from 1984 Yearbook: 
Favorite Drinking Establishment:

1. The Avalanche.              7. Major Goolsby's.
2. The Gym.                      8. Park Avenue.
3. The Ardmore.                 9. Mugrack.
4. O'Donohues.                 10. Lighthouse.
5. O'Pagets.
6. Hagerty's.

jsglow

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Re: Short sales
« Reply #21 on: February 14, 2020, 02:53:47 PM »
One more tiny piece of advice Coleman.  And I will quote my long time Chairman, may God rest his soul.  'Remember jsglow, there's only 4 days that count in the calendar year.' 

Back in the days of compromised balance sheets and highly elevated NPAs (not really true anymore), that was a big deal.  Cash money on 3/31 me like; 4/1, eh, I'll get to it someday.  ;D  I could tell you New Year's Eve stories that would curl your toes including one bank Chairman screwing another just out of a long held spite.  And we're not talking about some stupid single family home.

Coleman

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Re: Short sales
« Reply #22 on: February 14, 2020, 03:09:40 PM »
One more tiny piece of advice Coleman.  And I will quote my long time Chairman, may God rest his soul.  'Remember jsglow, there's only 4 days that count in the calendar year.' 

Back in the days of compromised balance sheets and highly elevated NPAs (not really true anymore), that was a big deal.  Cash money on 3/31 me like; 4/1, eh, I'll get to it someday.  ;D  I could tell you New Year's Eve stories that would curl your toes including one bank Chairman screwing another just out of a long held spite.  And we're not talking about some stupid single family home.

Sorry, I’m dumb. Are you saying the bank would wait on it longer if close was after quarter end?

rocket surgeon

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Re: Short sales
« Reply #23 on: February 14, 2020, 08:16:54 PM »
just out of curiosity, how are the taxes in libertyville?  i have a bro-in-law in lisle with an $800 + house.  he's paying around $20k/year
i'll take ape tit for $200 alex

Coleman

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Re: Short sales
« Reply #24 on: February 14, 2020, 09:00:07 PM »
just out of curiosity, how are the taxes in libertyville?  i have a bro-in-law in lisle with an $800 + house.  he's paying around $20k/year

Taxes suck. $400,000 house has $16k in taxes a year. It is what it is, it’s one of the best public high schools in Illinois

 

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