AAAAAAAAAAAAHHHHHHHH Short Sale Madness!!!!!!

[Anonymous]

This is not encouraging...I've heard over and over that short sales can be a royal pain. So it just figures that the house leading our list of possibilities is, of course, a short sale. Of course all this is moot since we have to sell our house first and apparently it isn't going anywhere...no showings in 2 weeks now...grrrr

[Anonymous]

Short sale = good for the seller (last chance)
short sale = good for the bank
short sale = horror for the buyer
So, to which group do you belong?

[Lel]

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@Anonymous wrote:
Short sale = good for the seller (last chance)
short sale = good for the bank
short sale = horror for the buyer
So, to which group do you belong?

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That's an interesting way to look at things. I consider short sales to be bad for everyone.

Bad for the sellers - they lose money. Sometimes a lot. And it shows up as foreclosures on their credit reports and severely limits their ability to buy homes in the near future.

Bad for the banks - they lose money. If this happens too much, they default on their obligations and fail, a la Bear Stearns.

Bad for investors - they lose money.

Bad for retirees - the fixed income recipients whose annuities and 401(k)s were invested in REITs have a drop in income.

Bad for buyers - they don't know whether their offers will be accepted....BUT if they have patience, they can come away with a good deal on a new home.


So if anything, the buyers have a greater likelihood of having a good outcome from a short sale. It comes with a lot of frustration, though.

[Lel]

I guess my previous post is not quite accurate, as Bear Stearns didn't fall because they made and sold mortgages, but rather because they invested in mortgage-backed securities and other real estate market derivatives that put them at risk. IndyMac would have been a better example.

[Anonymous]

Well the bank accepted our offer and we close in two weeks. A long wait but worth it I guess.

[Anonymous]

I never understand why people say that a bank is better of foreclosing rather than taking a short sale.   After they foreclose, they own the property.  Since banks are not here to purchase and own property, they will need to sell it.   From my experience, the longer you wait, the more the price continues to decline.   

To me, rejecting all short sale offers and letting the property go to foreclosure is a bad, and possibly horrible, business decision.

[Anonymous]

Congrats!

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kraig wrote:

Well the bank accepted our offer and we close in two weeks. A long wait but worth it I guess.

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[Anonymous]

Short sales are bad when there are multiple banks becuase in a short sale, the 1st lender get a full share until they are paid off then the other lenders get their piece of the pie (usually nothing). In a foreclosure auction, all parties are paid according to how much they owned of the debt.  SO, if multiple lenders have to agree to the deal, the 2nd and 3rd lender are usually better off with an auction than a short sale.  That doesn't mean that they will say no, but they have to weigh whehter they want to  just write it off, or fight for a few pennies on the dollar.