Will the bank accept this short sale offer?

Short sales are interesting and frustrating at the same time. You never know what you are going to get in the pre-foreclosure mix. It is hard to predict if a lender will O.K. a short sale because of the variables (click here for a 12-part series on short sales).

I have a client who was interested in a Chandler short sale in zip code 85249. Here are the details:

• built in 2004 with 2,232 sq ft
• 4 bedrooms, 2 bathrooms, and a 2.5 car garage
• lot size of 8,126 sq ft

The house was:

• most recently bought for $330,000 in 7/19/2006
• secured using a 10% down payment and a mortgage balance of $297,000 (from the county tax records)
• listed as a short sale to avoid foreclosure on 5/19/2008 for $279,000
• reduced to $239,900 on 5/14/2008
• reduced to $219,000 on 5/23/2008

That's when my client took notice. Who wouldn't notice a Chandler home in a good neighborhood for under $100 per- sq ft? We weren't the only ones because it went "pending" before we could get serious about it (have to be fast again).

That's where the short sale can get frustrating for the buyer. A lender can take anywhere from 4-6 weeks (or longer) to even respond to an offer while the buyer wonders if they will be packing their belongs for a move. In this case the original lender was Homeview Lending. Then, factor in that the listing agent's "marketing price" is $78,000 (plus accrued interest, fees, etc) less than the mortgage balance. I call it a marketing price because the bank has not agreed to sell at this price -- the agent simply kept lowering the price until an offer was received. The lender could easily "snub" this price.

I love getting great deals for my clients, and short sales can be great deals. Short sales can be perfect for a buyer who is not in any hurry and is waiting for the perfect combination of price, features, and location. However, call me crazy, but I prefer a great deal on a bank-owned (REO) property --where a lender will normally answer within 2-days -- any day of the week.

Comments

[John Redford]

What a fantastic blog!!
I loved how detailed each of the entries were.
They were well balanced - fun and informative - and the pictures were great too.

[Ron]

Thanks, John!

[Aurora Colorado houses for sale]

Thanks for mentioning this topic. A friend of mine was in similar situation too. There are good deals on short sale properties. Due to the risks involved and the complicated process, it is certainly important to have a Realtor who is experienced in short sale complete the deal.

-Audrey