I’m in the later stages of escrow on a short sale, so it remains to be seen whether it’s a “successful” experience or not. 🙂
Expect a lot of competing offers, and expect to wait … and wait … and wait some more.
This is the second short sale my wife and I have tried to buy. On the first one, our offer was accepted rather quickly, only to disappear into the bowels of BofA’s approval process for 60+ days. When the “approval” package finally came back, the seller discovered a nasty little piece of paper requiring them to make good on any loss. Keep in mind that BofA told the seller over the phone that their short sale was “approved” and failed to mention the small matter of $270k they wanted over the selling price. The listing agent drove by and yanked his sign out of the yard the next day. That house has been vacant for several months now and will probably fetch $10-20k less than our offer as an REO.
We wised up on the second (current) short sale: fire and forget! To our surprise, our offer was accepted on this one too. Other offers were for higher dollar amounts, but they were all FHA, contingency-laden, etc., so ours looked the most attractive overall. It took 65 days for the bank (don’t recall who they are at the moment–some no-name lender) to come back with a positive answer (also a surprise), but a couple of weeks of that were due to the seller having difficulty locating some paperwork.
From there, it’s all gone fairly quickly: inspection, termite, appraisal, loan underwriting, etc. are complete (17 days into a c. 27 day escrow); the “to do” list is down to selecting from a couple of competing quotes for homeowner’s insurance and miscellaneous “i” dotting and “t” crossing. If all goes well, we should have the keys a week from Wednesday.
We never stopped looking while either of these were in the banks’ hands, but inventory has been so low this year that there wasn’t anything else we wanted to make an offer on.
The disadvantages to a short sale mostly revolve around the fact that it’s a crapshoot: the bank may or may not approve it, and you’ll grow old waiting to find out. On the plus side, full disclosures apply just like in a normal sale and there’s some room to work with the seller. We worked this to our advantage in the offer by not requiring them to remove a bunch of junk all over the property. This would give us zero leverage with a REO, but the older lady who currently “owns” the house is overjoyed to not have to deal with it.
Short sales are a pain, but just like the lottery you gotta play to win. Not that we got a great deal or anything, but this was just about the only way we could find a house in our price range.
