Why is everyone trying to short sale these days instead of waiting for the bank to take the property back and just simply haggling an offer instead if trying to get the homeowners to roll over and behave.So they can fight and haggle with the Loss Mit dept. only to find out their offer is not accepted?
Because once bank takes possession, there becomes more fees involved. Sometimes you can get a better deal since the 2nd will be settled for pennies on the dollar.
Also once bank owned, you need to go thru a realtor that has good connections with finding REO’s, however the offer process is much faster.
I have bought foreclosure homes. Most of the times they are trashed. Why would a home owner take out their frustrations out on the property? Who knows why, but they do. If you follow a property through foreclure you will begin to see that toward the end the home owners begin to strip everything from the home. The property won’t sell so they begin to know the end is near. They start by removing the appliances, but they scratch the floors and walls taking them out. Then they might even strip the cabnets, flooring, etc. They usually don’t remove anything nicely, they distroy the property.
You might be better off if you can get the place while it is in foreclosure but not before the seller’s believes it is too late. Once they know the bank is getting it, the house will be stripped and damaged. That’s fine but you will need to have money to rehab.
I am starting to wonder the same thing as well.
Last summer/fall/winter I offered Equifirst 55k for a short. They gave me the big blow off. 4 months after the auction(asked 92k) the home is now listed with a realtor for 39k. The only thing now missing is the furnance (1.5k), the lender even cleaned the place out. If I could get a mortgage for 40k I’d buy it. I think this failed short sale was due to the fact that Equifirst was up for sale at the time and 115k in assets(amount loaned) looked better on the books than the 55k I was offering.
This spring HomEq and I finally came to an agreement on a home. The only problem was that they gave me 10 days to close. When I could not close in that time frame they took the home to auction. My accepted offer was for 150k but at the auction they asked for 133k. No bidders so it went back to them. This house needed about 2k refreshing and has an ARV of 200k-210k. I will keep my eye out for this one in the coming months.
I think of short sales as giving you first shot at making a good deal. You get inside the property and can control the property(via contract) until you can make a deal. Though in my examples waiting for and after the auction was more prudent. Dealing with the homeowner can be difficult if the short sale takes forever and you’re in a state where notice to auction is just a few weeks/months difference.
I would try to short sale if possible. But if the lender won’t budge then wait until it forecloses. Even if you can get them to short sale that doesn’t mean the property won’t still be over priced.
I’d try to get the property before it forecloses because the property won’t be stripped and damaged. But if you can’t get a great deal by a short sale then let it go into foreclosure.