foreclosure

A short-sale success story… another home sold

I managed to get another home sold as a short-sale last week for a buyer client. This one was in Herndon and is a pretty big house, but it was grueling for my clients as information came super-slow from the other side. Honestly, the whole set up stinks because everyone (buyer, seller, agents, inspectors, and even the attorney’s) are working at the whim and discretion of the bank which can reject the whole thing at the last minute.

A few month’s ago I put together a post on real estate short-sales and what to expect, but now feel that it takes a tremendous leap of faith from everyone involved to get one of these done. I believe that these clients submitted three short-sale offers before getting this home.

Here are my random musings…

foreclosure

Buying a short-sale in Northern Virginia

So you pulled up a listing in the neighborhood that you would kill to live in and it is priced $100,000 below the last sale. “Honey, get the keys cause we are gonna buy that house”, you say wildly.

What you did not see written into the comments section is this home is a short-sale that needs the lender’s approval. Someone in the sale is coming up short, and that, my friends, is where the current mortgage lender (the bank) gets involved. And I mean really involved because the seller is asking the bank for permission to sell at a loss.

Basically, the seller is on his knees, praying that the bank will agree to solve his problem.

A lot of people now owe more on their homes than the homes are currently worth, especially after the market made a giant 180º turn starting in 2006. The situation was aggravated in 2008 as many people began to lose their jobs. Combine that with some exotic mortgage programs based on increasing value models and you can see why the house of cards collapsed into a smoldering heap of despair and destruction. Too vivid?

A short-sale is a pre-foreclosure attempt to sell, and to preserve the seller’s credit (FICO) standing since foreclosures kill a reputation. And unlike stock sales that are short, you cannot itemize a loss on a home on your tax return.

Short-sale properties are often too good to be true because banks hate to take a loss of any kind. Offers on short-sales are low priority taking a month or four to get a response. Some banks never respond.

Personally, I have only had one of 7 short-sale contracts work out. In baseball that would be a batting average of .142. Most agents are still batting 0, and tell their clients not to waste their time. Actually, that may be excellent advice.

If you are considering buying a short-sale to be your next home, understand the uncertainty going in, make your offer as flexible as possible so you can back out if you find another home, and keep looking. Banks are trying to sell these homes before they have to foreclose (which costs banks 10k’s+), so there are bargains out there for those of you with the patience and understanding that this is anything but an easy transaction.

foreclosure

5395 Abernathy Ct, Fairfax, Virginia – FX6998101

Just Sold! Built just four years ago and in very good condition for a foreclosure. Stanley Martin “Newport” with the sunroom!

View Larger Map

foreclosure

Considering buying a foreclosure?

You may not think about it when you see the sweet price on this Fairfax foreclosure. But the people have been living there probably mad as heck and taking it out on the house. So what is the potential problem if they flushed a little extra goop like cement into the sewer lateral? Trouble!

And the paperwork the bank is going to send will strip you of your rights as a human being… take it as-is, bub and you better know now if there are issues. Know now? We haven’t really been in the house…

There are a lot more variables when considering buying a foreclosure…