Los Angeles

[Adam Bray-Ali]

Hello Missy and welcome to the forum. 

There really are no hard and fast timing rules with short sales.  The main things that can derail the process include (but are not limited to) items like this:

Seller related:

- No evidence of financial hardship

- lack of documentation from sellers to lenders

- some type of discrepancy in the original loan process

Property related:

- Lenders want more money than a buyer is willing to pay

- Property not attracting offers

Process related:

- Smaller bank with less defined processes can take longer

- Inexperienced agents on the listing side can cause a slowdown.

[Josh115]

Hello there!

I was wondering if I could get some advise regarding the situation that I'm currently in?  There was a property that was listed as short sale for 349K.  I made a offer which the listing agent accepted however the bank came back with a counter of 355K which I also accepted.  In waiting for the bank to approve the offer the property went in foreclosure.  Now I'm wondering what to do?  Would FHA finance a property that recently went from short sale to foreclosure?  I heard of some 90 day rule and I'm not sure if this would be a issue?  Second since it's in foreclosure now would it be wise to re negotiate the price? or wait for it to comeback in the market? Any help would be greatly appreciated,  Thank you in advance!

[Adam Bray-Ali]

Welcome Josh. 

Sounds like the timing of your offer just didn't work out in your favor!  Once the property goes into foreclosure you are basically waiting for the property to be listed as an REO, or bank owned, sale.  There is no guarantee that it will be put to market but if it does, the price it is advertised for may be similar to the ~$350K range it was at before. 

As long as the property meets the (fairly minimal) requirements from the FHA for quality control you should have no trouble with getting an FHA loan.  The 90 day rule is designed to discourage people flipping properties quickly by not allowing buyers like you from purchasing a property that has been sold in the prior 90 days.  A foreclosure doesn't count.

Until it comes back on the market, there is no one to negotiate with.  The prior sellers and their agent are no longer party to the transaction.  You shoudl absolutely try to get as good of a price as possible given the opportunity!

Good luck. 

[Josh115]

Wow you are like a real estate dictionary!!! Thank you so much for the clarification,  You made it so easy for a "newbie" like me to understand!  Thanks again!

[Adam Bray-Ali]

You are welcome Josh.  Part of what we do here at Zip Realty is try to offer the best agents with the best technology.  There is a lot that the technology can do and then we have many hard working folks like me in the area working with buyers and sellers. 

[luvyaalways]

Hello Adam, in response to Josh's question about his short sale going into foreclosure. Is there anything that could give me a good projection of where I stand. What I mean is, there is a house that's on short sale. The listing shows it listed in February. How long do I have to start the short sale before it starts going into foreclosure?

[Adam Bray-Ali]

Welcome Luvya.

The only way to tell is looking at the public records for the property in question and learning when it is scheduled to be sold at auction.  The date of the real estate listing has much less to do with the timing than what is going on with the lienholder(s) that are currently working with the seller. 

Technically, a short sale may not be in danger of foreclosure.  It is simply being sold for less than the current amounts owed.  If the seller is not able to pay the difference then the banks have to aborb the loss.  They prefer not to do that for obvious reasons and one way to force their hand is to stop paying the mortgage and move towards a default on the loan. 

If you provide me with the address I would be happy to tell you what I can find out. My email address is aali@ziprealty.com 

[CuriousHunter]

Hi, 

I have a question I am hoping to get some insights on.  I have made an offer on a short sale which was accepted by the seller. (asking price was 340k I offered 330k.  Seller's agent then pushed me to open escrow right away, which I did and put my good faith deposit in.  A couple of weeks later, the bank countered my offer and asked for $435k!  Yes, $105k more than my offer. 

With my agent's help we drafted a letter requesting them to get a second bpo or appraisal on the property since there is no way it will sell for that much.  Now, I don't even know if they will reconsider my offer at $335k (I went up just a little more but asked for closing so basically it is the same deal), but I was wondering how likely it is for the banks to counter with some extravagant number?  What are the chances that they will meet me all the way down at my price point (it is the max I qualify for so I cannot go higher)? I know it depends on the bank, and each situation is different, but I just want to hear if you had an experience like this? The good thing is there is only one loan, and the bank is at least responsive, just not in a favorable way.

Thanks.

[Adam Bray-Ali]

The answer to your questions are really dependent upon how much the property should appraise for.  I understand that it was listed at $340,000 but are similar properties in similar condition in the area selling for that price or much higher? 

The reality is that the lender wants to maximize their return with the least expensive path.  If they think they can sell this as a foreclosed property for $400,000 then your chances of success are pretty small.  If they think it should be worth $350,000 you have a much better likelihood of this working in your favor.

[mrsartis1]

What is the seller's bank?