Saw a property in Florida that just came on the market for short sale.
Property is probably worth around 180K (my quick comps based on adjacent properties). Listing agent told me they just started the short sale process and may take months (as usual, been there, done that). They had it listed at 259K, I asked why so high, the agent said they were encouraged by the bank to list high then lower every 30 days. Right now they have no offers because it's so high.
I am prepared to buy it with an AS-IS offer with cash for 165K. That is the number that makes it worthwhile to me.
The agent said to submit an offer to start things rolling. She said the sellers will accept offers for the next 30 days, and at the end of the 30 days will select the "best" one and send to bank for approval, the rest of them would become back up or they can withdraw.
I don't want to make an offer just to be a "guinea pig" in the beginning of a short sale process. I think if it's list at 259K and I turn in an offer at 165K there is no chance for it to be accepted. I also don't want to send in an offer that would be used as leverage to tell other potential buyers "we already have one at 165K so you better go up and hurry..."
May be I should wait for the price to drop if no one bites.
Does short sale properties get submitted one at a time always? Or can the listing agent tell the asset manager as offers come in so the AM can use that to help him decide?
Or may be I should send in an offer with a 48 hour acceptance period so they cannot let it sit for 30 days, they need to either accept in 48 hours or counter or reject.
Thoughts?
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Jack - I think that is a very strange procedure for the listing agent to encourage her seller to "sit" on offers for 30 days, then select one. Most buyers wouldn't wait 30 days for the seller to make a selection. Short sale contracts should only be submitted one at a time to the lender. Other "contracts" must be back-up offers, should the primary contract fail. It seems to me your offering price is so low compared to list price (even though overpriced), that your chances of obtaining this property are low, too! In any event, if I were to submit an offer, I would only allow a few days for response.
Wendy, I had another talk with the agent today and reading between the lines I think this is what's happening.
The sellers are doing a strategic default. They took out an interest only loan (no down payment) so they didn't build any equity all along and now they are walking away from it.
However they want to take the time to do it, while they look for another house to buy. Since they are "defaulting" they can't buy anything, so their "brother" will buy it for them. They want to vacate the property once they found a new home but they are not in a hurry, in fact they want to stay as long as they can as long as they get out before that forgiven debt deadline hits the end of 2012.
So I think the agent was instructed to buy time, and probably listed it unrealistically high at 259K and they can reduce 10K each month or so until they hit the sweet spot, does this help the bank at all, to be shown that they lowered price incrementally to get the highest possible price?
The agent told me if they get an offer at 185K it won't appraise so my 165K offer is not unreasonably low. If someone else offer with a loan contingency and they play the delay game, that someone would get into a situation where they rate lock will expire.
I am still trying to figure out if I should wait till the price become realistic or move in now.
Wow Jack- you need to run from this. My thoughts:
1) The agent actually told you they were trying to do a strategic default and buy time? I have serious concerns about this agent's ethics and skill in actually closing this short sale.
2) As they do not have pre-approved short sale the servicer is unlikely delaying the start of foreclosure just because it is on the market. There is no real delay game here- other than in the agent's or seller's imagination perhaps. It may be wishful thinking to believe they can stay until the end of the year. UNLESS they are making payments and may not even have any resemblance of a hardship other than an underwater home.
3) Why would you want to put in an offer? The seller doesn't want to leave anytime soon, and if they can afford another home the investor is going to see this. I wouldn't touch this short sale with any length of stick!
4) If you feel you must put an offer in- make it contingent on the seller signing or countering within 48 hours as Wendy recommended. Be sure to also have a short sale addendum requiring the lender to approve the sale within 60 days to get you out of this if it goes nowhere.
There is no need to wait for the price to come down- the agent already told you she just made it up.
I am interested for several reasons.
It is in a unique location that have VERY low turnover. People in that neighborhood been there since the 60s and 70s and rarely will a property become available. It is surrounded by properties in the 500, 800, 1.2m ranges because it is close to the water. It is literally the cheapest property on those streets but it has the largest lot. It has no where to go but up.
I am viewing it as an investment and will rent it after making a few minor repair and wait for the appreciation play. I could accommodate their flexible timing requirements because I don't have a set date that I must occupy and I am offering cash so no loan rates and dates to worry about. I am hoping those will give me some leverage in getting a better deal. If the sellers don't care how much the offer is (they are not getting a dime back anyways) then they may sign on the offer that gives them the best flexibility.
Yes, it seems there are lots of pot holes with this one. I have to walk carefully.