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Short Sales (Real Estate)
Old 04-12-2011, 08:26 AM   #1
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Short Sales (Real Estate)

DD is jumping from the nest and into the real estate market. We live in a county that is flagged for high foreclosure rate. There are some decent deals out there (lots of them), but we are quite amazed how the banks seem to be exacerbating an already difficult situation. Homeowners don't seem motivated to move on either.

DD is on her 4th property negotiation. She has offered full asking price for each property (all listed as short sale). One property had multiple full price offers and the bank rejected them all to solicit higher bids. The other two were either rejected by bank or withdrawn due to slow response from lender. The bank takes 3 wks or so to make a decision and there is no progress information available until they respond. It seems like there are no rules/guidelines for the SS process and banks can do whatever they want. I beleive it is dragging down the housing recovery in this area
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Old 04-12-2011, 08:44 AM   #2
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Has she been considering any normal homes for sale in this process? Sellers not in trouble will negotiate if you put in an offer. We just sold our house, closed on 3/24, and normal homes for sale have to be compared to shorts and foreclosures. My agent mentioned that buyers were choosing homes in this order: foreclosures, shorts, then non problem homes last. I don't understand this thought process, since buyers run into problems with time delays and greedy banks dealing with the first two. My house was in Chicago and we've had a slow to lousy housing market up to this point.
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Old 04-12-2011, 09:14 AM   #3
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My agent mentioned that buyers were choosing homes in this order: foreclosures, shorts, then non problem homes last. I don't understand this thought process, since buyers run into problems with time delays and greedy banks dealing with the first two. .
In her price range, most of the properties are in some stage of foreclosure, so supply and demand is key. It's amazing how consistent the pattern is....many were previously sold 4-7 yrs ago for 30-40% above the current market. Many have been on the market for 1 yr or so. Very difficult for non-problem sellers to compete in this market. If she was in a hurry or looking in the move-up category, a non problem home would be more likely. She's living at home (almost) rent free currently.
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Old 04-12-2011, 09:37 AM   #4
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I can tell you no matter how low you think an offer might be from the buying perspective, price is the #1 motivator. Any seller holding onto a house for a year or more, will consider the offer. As a buyer, the ball is in your hands, if you like a house, and it's a bit over your price range, get good comps and make an offer based on the comps, not what the seller is asking, no matter how low the price is. We did this with a house we liked, came in around 75% of the asking price, and this was after they came down 3-4 price drop over most of a year ($100k total reductions). Turns out, they were desperate to sell, and we were the only people to even make an offer.
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Old 04-12-2011, 10:56 AM   #5
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Short sells can be very difficult....

While looking for a house... I saw one listed by the owner and a good price... then it was delisted the week I went looking... but my RE agent got in touch with the listing agent and I went and looked at it.... it was being rented...

Put in an offer and nothing... heard that the owner (who had already moved to another house) had filed bankruptcy...

Now, I could not find another house I liked for the price I wanted to pay... (this was the beginning of the crisis, so they had not yet figured it out)... so, I kept in touch with this house... the BK court did nothing with the house as it had no value.... but the mortgage company did not foreclose... so the owner did not think he was the owner and the mortgage company was not the owner.... this went on for about 9 or so months..... (the renters were also not paying any rent!!!)...


Now, I get a call from the agent saying they want to do a short sell... so I put in my bid... and nothing... after WEEKS... I ask what is happening... seems that the WIFE did not want to sign any papers on the old house as the BK was supposed to take care of this...

Months go by and I then decided to 'bribe' the homeowner... I said 'If you sign the papers and I buy the house I will write you a check for $5K'... this finally got them moving..... they agreed to the deal and it went to the morgage company where it sat for a long time... I then asked the RE agent to go and take another look at the house... it had been maybe 2 years since the first time I had looked at it...

Well, the free renters had a big dog... who scratched the heck out of most of the doors and other wood items in the house... and the house SMELLED like dog... and then at the end I see a big section of wall along the back that had mold and mildrew... it seems the renters did nothing to clean out the gutters etc. and the water just backed up and seeped into the house... so now the house was not in great shape and it would cost me some $$$s to get it back in shape... so I took away my offer...

We will be in our current house for two years in another month... and that house is STILL being occupied by the free renters... I don't think the morgage company has ever foreclosed etc. etc... (just check... nope... still in limbo)...
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Old 04-12-2011, 11:08 AM   #6
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Short sales are a pita to deal with.
But foreclosures have been really streamlined (at least locally in GA).
We are in process of buying a house from Freddy Mac and they have been quite efficient to deal with. Responses to our offers and counteroffers within few hours. Contract signed on 3/23, expecting to close on 4/19.
It would have been even faster, but got delayed by the house being in flood zone.
Wish us luck or not - as this might delay our FIRE date, all decisions are speculations after all
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Old 04-12-2011, 11:42 AM   #7
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but the mortgage company did not foreclose... so the owner did not think he was the owner and the mortgage company was not the owner
Saw some of this after the S&L crisis in the early 1990's. The banks began to realize the liability of owning vacant and/or occupied property. Especially in MA with the lead paint laws.

So an investor I knew with a limbo property (no mortgage payments in years ... no forclosure because the bank didn't want it) made a killing collecting the rent every month; servicing the property like it was free n'clear. Everyone was "happy". Property was maintained and tenants paid what they could.

The owner is on record at the registry and is missing an opportunity IMO.
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Old 04-12-2011, 11:55 AM   #8
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Has she been considering any normal homes for sale in this process? Sellers not in trouble will negotiate if you put in an offer. We just sold our house, closed on 3/24, and normal homes for sale have to be compared to shorts and foreclosures. My agent mentioned that buyers were choosing homes in this order: foreclosures, shorts, then non problem homes last. I don't understand this thought process, since buyers run into problems with time delays and greedy banks dealing with the first two. My house was in Chicago and we've had a slow to lousy housing market up to this point.
+1

Look for homes owned by the elderly who may have paid them off long ago and no longer owe an arm and a leg on their homes. Many would be glad to see any offer so that they can move on to a nursing home or assisted living. These houses are often dated but in excellent condition - - nicer homes than foreclosures as well.
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Old 04-12-2011, 12:12 PM   #9
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+1

Look for homes owned by the elderly who may have paid them off long ago and no longer owe an arm and a leg on their homes. Many would be glad to see any offer so that they can move on to a nursing home or assisted living. These houses are often dated but in excellent condition - - nicer homes than foreclosures as well.
Sounds like what we got exactly! Owners were in perfect health, but were 86 yrs old. They wanted this to be their home until they went out "feet first" was the way the husband told me at closing. They couldn't negotiate the stairs to the 2nd floor anymore and decided it was time to move into a retirement community. Place is very dated, circa 1963, I've been updating rooms/items since we bought it. Single pane windows are gone now, still need to update the really old wood paneling in the family room, but I'm okay with it, the price reduction made up for the changes that are needed.
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Old 04-12-2011, 12:38 PM   #10
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Sounds like what we got exactly! Owners were in perfect health, but were 86 yrs old. They wanted this to be their home until they went out "feet first" was the way the husband told me at closing. They couldn't negotiate the stairs to the 2nd floor anymore and decided it was time to move into a retirement community. Place is very dated, circa 1963, I've been updating rooms/items since we bought it. Single pane windows are gone now, still need to update the really old wood paneling in the family room, but I'm okay with it, the price reduction made up for the changes that are needed.
Sounds lovely! The nice thing about buying a dated home is that you can update to your own tastes, as much or as little as you wish. And it is nice to know that the former owners were able to move on.

It may sound like a travesty, but sometimes just painting dark old paneling like that a light neutral cream color can make a huge difference and make a home seem light, fresh, and airy instead of cave-like. My dear friend F. was nearly apoplectic when our realtor suggested painting his beautiful old hardwood paneling, but he gave in and had that done when preparing to sell and (now that we decided not to move after all) he loves it and says he should have done it years ago.
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Old 04-12-2011, 12:46 PM   #11
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Sounds lovely! The nice thing about buying a dated home is that you can update to your own tastes, as much or as little as you wish. And it is nice to know that the former owners were able to move on.

It may sound like a travesty, but sometimes just painting dark old paneling like that a light neutral cream color can make a huge difference and make a home seem light, fresh, and airy instead of cave-like. My dear friend F. was nearly apoplectic when our realtor suggested painting his beautiful old hardwood paneling, but he gave in and had that done when preparing to sell and (now that we decided not to move after all) he loves it and says he should have done it years ago.

Heck, I LIKE the wood paneling in our house.... I have not seen any house that has had it painted look better than not... but since this is personal taste... I can see where others would disagree....

PS... mine is not 'dark'... kind of medium.... but you can really see the grain of the wood which is what I like..
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Old 04-12-2011, 12:52 PM   #12
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Heck, I LIKE the wood paneling in our house.... I have not seen any house that has had it painted look better than not... but since this is personal taste... I can see where others would disagree....

PS... mine is not 'dark'... kind of medium.... but you can really see the grain of the wood which is what I like..
So did he! He thought it was one of the best features of his home. His was extremely dark, very thick hardwood, masculine, majestic, and absolutely beautiful. He loved that old wood paneling and thought it would be a sin to paint it. For years he would sneer at people on HGTV who painted their paneling, too.

It made an indescribably huge difference in the atmosphere of the house. No longer dark, heavy, and cavelike - - it is now light, cheery, and springlike to the point that it even lifts his mood. When we decided not to move, one of the first things I said was, "oh no, your paneling! ". I am positive that he would NEVER have painted it in a million years, had the realtor not strongly suggested it in order to sell. As I recall, he said, "oh well, it's not going to be my home for long anyway". Amazingly, he absolutely loves having a lighter colored home now that it is painted.

I was really worried for a while because the color he chose almost looked buttery. But luckily, when it was applied it didn't look quite that yellow and it is more creamlike.
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Old 04-12-2011, 01:05 PM   #13
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Sounds lovely! The nice thing about buying a dated home is that you can update to your own tastes, as much or as little as you wish. And it is nice to know that the former owners were able to move on.

It may sound like a travesty, but sometimes just painting dark old paneling like that a light neutral cream color can make a huge difference and make a home seem light, fresh, and airy instead of cave-like. My dear friend F. was nearly apoplectic when our realtor suggested painting his beautiful old hardwood paneling, but he gave in and had that done when preparing to sell and (now that we decided not to move after all) he loves it and says he should have done it years ago.
I don't think anything will do my paneling any justice. This is the cheap stuff you can find at Home Depot that you only want in your basement. I also have to remove the ceiling, it's basement ceiling material, compressed cardboard tiles that were stapled to furring strips. Then I also have parquet flooring that needs to go too. Parquet is only good for the Boston Celtics! It hasn't been the "in" flooring product since the 70's? I have a dropped ceiling panel in my powder room, plastic grids stuff. Many agents have commented that I need to put in higher quality items since the neighborhood I'm in is considered upper middle level. Too bad the old owners didn't know this. I still have puke green and baby blue bathtubs to deal with upstairs.
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Old 04-12-2011, 01:19 PM   #14
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I don't think anything will do my paneling any justice. This is the cheap stuff you can find at Home Depot that you only want in your basement. I also have to remove the ceiling, it's basement ceiling material, compressed cardboard tiles that were stapled to furring strips. Then I also have parquet flooring that needs to go too. Parquet is only good for the Boston Celtics! It hasn't been the "in" flooring product since the 70's? I have a dropped ceiling panel in my powder room, plastic grids stuff. Many agents have commented that I need to put in higher quality items since the neighborhood I'm in is considered upper middle level. Too bad the old owners didn't know this. I still have puke green and baby blue bathtubs to deal with upstairs.
I hate parquet flooring too! Maybe that's why. I guess if the paneling is that thin, it shouldn't be too hard to remove it.
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Old 04-12-2011, 02:36 PM   #15
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So did he! He thought it was one of the best features of his home. His was extremely dark, very thick hardwood, masculine, majestic, and absolutely beautiful. He loved that old wood paneling and thought it would be a sin to paint it. For years he would sneer at people on HGTV who painted their paneling, too.

It made an indescribably huge difference in the atmosphere of the house. No longer dark, heavy, and cavelike - - it is now light, cheery, and springlike to the point that it even lifts his mood. When we decided not to move, one of the first things I said was, "oh no, your paneling! ". I am positive that he would NEVER have painted it in a million years, had the realtor not strongly suggested it in order to sell. As I recall, he said, "oh well, it's not going to be my home for long anyway". Amazingly, he absolutely loves having a lighter colored home now that it is painted.

I was really worried for a while because the color he chose almost looked buttery. But luckily, when it was applied it didn't look quite that yellow and it is more creamlike.

I would agree that if the paneling was dark and heavy... such that you could not even see the beauty of the wood..... which is what I am thinking how you wrote.... but if it were me... I would just sand the wood and apply a lighter finish.. heck, you can get very light finish and still see the beauty of the wood...
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Old 04-12-2011, 03:30 PM   #16
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If it was old varnish it could have been washed mostly away with ammonia. We wiped off old 1912 molding and brightened it up by half - didn't apply any new finish, just removed and redistributed the old.
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Old 04-12-2011, 05:49 PM   #17
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Short sales are a pita to deal with.
Yeah, this is what we are learning. Her price range is so low that her choices are limited anyway. My concern with a fixer-upper is that I will have to be more involved than I really wish to be. Updating is no problem. We are all getting our hearts set on the home she just put an offer in on. It needs very little work compared to all the other distressed properties she has considered and the seller has been very responsive. We are waiting for the bank. We are excited.
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