Chances of buying an REO or short-sale without 20% down?

[Eugene]

[quote]What exactly do you mean by ‘sticking around long enough for your offer to make it through the system’? What does one have to do, after submitting an offer? Sorry, I have no knowledge of how the short sales work – yet![/quote]

Submit an offer and wait, possibly several months, while the offer is being considered by the bank. Keep an eye on the market, make other offers. I heard that most short sale offers don’t go anywhere, and the success rate is very low. For this reason, discount brokers like Redfin don’t even deal with short sales (with a few exceptions). I would encourage you to keep shopping around till the day you get written approval of one of your offers.

[patientrenter]

[quote=Scarlett] ….saving another 10% down payment or 50-60K may take years and years, realistically (in my case). In the mean time, with kids, it’s nice to have a larger house & yard while they are still young. I didn’t mean that I would buy something right away, but perhaps in the next year or two – hopefully by then the prices would have reached their last/bottom leg in areas I am looking.
[/quote]

Scarlett, I am sure that you are a wonderful person, but if it would take you “years and years” to save 10% of the price of the home you want to buy, then you cannot afford it. The only way you can “afford” it is if its price only goes up, not down. That is never guaranteed. It is widespread denial of the simple ‘cash flow’ criterion for affordability that got the entire economy into its current fix.

[patientrenter]

[quote=Scarlett] ….saving another 10% down payment or 50-60K may take years and years, realistically (in my case). In the mean time, with kids, it’s nice to have a larger house & yard while they are still young. I didn’t mean that I would buy something right away, but perhaps in the next year or two – hopefully by then the prices would have reached their last/bottom leg in areas I am looking.
[/quote]

Scarlett, I am sure that you are a wonderful person, but if it would take you “years and years” to save 10% of the price of the home you want to buy, then you cannot afford it. The only way you can “afford” it is if its price only goes up, not down. That is never guaranteed. It is widespread denial of the simple ‘cash flow’ criterion for affordability that got the entire economy into its current fix.

[patientrenter]

[quote=Scarlett] ….saving another 10% down payment or 50-60K may take years and years, realistically (in my case). In the mean time, with kids, it’s nice to have a larger house & yard while they are still young. I didn’t mean that I would buy something right away, but perhaps in the next year or two – hopefully by then the prices would have reached their last/bottom leg in areas I am looking.
[/quote]

Scarlett, I am sure that you are a wonderful person, but if it would take you “years and years” to save 10% of the price of the home you want to buy, then you cannot afford it. The only way you can “afford” it is if its price only goes up, not down. That is never guaranteed. It is widespread denial of the simple ‘cash flow’ criterion for affordability that got the entire economy into its current fix.

[patientrenter]

[quote=Scarlett] ….saving another 10% down payment or 50-60K may take years and years, realistically (in my case). In the mean time, with kids, it’s nice to have a larger house & yard while they are still young. I didn’t mean that I would buy something right away, but perhaps in the next year or two – hopefully by then the prices would have reached their last/bottom leg in areas I am looking.
[/quote]

Scarlett, I am sure that you are a wonderful person, but if it would take you “years and years” to save 10% of the price of the home you want to buy, then you cannot afford it. The only way you can “afford” it is if its price only goes up, not down. That is never guaranteed. It is widespread denial of the simple ‘cash flow’ criterion for affordability that got the entire economy into its current fix.

[patientrenter]

[quote=Scarlett] ….saving another 10% down payment or 50-60K may take years and years, realistically (in my case). In the mean time, with kids, it’s nice to have a larger house & yard while they are still young. I didn’t mean that I would buy something right away, but perhaps in the next year or two – hopefully by then the prices would have reached their last/bottom leg in areas I am looking.
[/quote]

Scarlett, I am sure that you are a wonderful person, but if it would take you “years and years” to save 10% of the price of the home you want to buy, then you cannot afford it. The only way you can “afford” it is if its price only goes up, not down. That is never guaranteed. It is widespread denial of the simple ‘cash flow’ criterion for affordability that got the entire economy into its current fix.

[urbanrealtor]

To Scarlett:
The things SD and sdr are saying are pretty much right.
Not a commitment until the contingencies are up.
I missed much of the conversation tonight because my buyer was dropping a verrrrry slooowwww moving reo when an older offer she had made on a short got approved by the lender (same lender ironically; you think they would have noticed). We were within contingencies and the reo deal had an asset manager who was out of touch with California. He wanted 3 bids before fixing a leaking gas line (I just called SDG&E while they took it up in committee). I have other clients who will make offers on a few short sales at a time. Again, if they are unable to sell in a timely manner, you have no real risk.

To esmith:
I often disagree with you ma’am but your suggestion of strategy is right on.

To patientrenter:
I really don’t think you have enough information to make those assertions. Lots of people who are perfectly capable of paying the mortgage on a $400,000 loan value are not likely to have an easy time saving an additional $100,000 for an 80% financed option.

Also, most of the reo’s I see (granted this is anecdotal) are not people with 5 or 10 percent cash purchases, with 30 year fixed loans, buying when PITI is comparable to rent.
Most appear to be people who financed 100% and/or bought when PITI was 2 times rent and/or were using a creative lending product.

How do you define one’s ability to afford something?

[urbanrealtor]

To Scarlett:
The things SD and sdr are saying are pretty much right.
Not a commitment until the contingencies are up.
I missed much of the conversation tonight because my buyer was dropping a verrrrry slooowwww moving reo when an older offer she had made on a short got approved by the lender (same lender ironically; you think they would have noticed). We were within contingencies and the reo deal had an asset manager who was out of touch with California. He wanted 3 bids before fixing a leaking gas line (I just called SDG&E while they took it up in committee). I have other clients who will make offers on a few short sales at a time. Again, if they are unable to sell in a timely manner, you have no real risk.

To esmith:
I often disagree with you ma’am but your suggestion of strategy is right on.

To patientrenter:
I really don’t think you have enough information to make those assertions. Lots of people who are perfectly capable of paying the mortgage on a $400,000 loan value are not likely to have an easy time saving an additional $100,000 for an 80% financed option.

Also, most of the reo’s I see (granted this is anecdotal) are not people with 5 or 10 percent cash purchases, with 30 year fixed loans, buying when PITI is comparable to rent.
Most appear to be people who financed 100% and/or bought when PITI was 2 times rent and/or were using a creative lending product.

How do you define one’s ability to afford something?

[urbanrealtor]

To Scarlett:
The things SD and sdr are saying are pretty much right.
Not a commitment until the contingencies are up.
I missed much of the conversation tonight because my buyer was dropping a verrrrry slooowwww moving reo when an older offer she had made on a short got approved by the lender (same lender ironically; you think they would have noticed). We were within contingencies and the reo deal had an asset manager who was out of touch with California. He wanted 3 bids before fixing a leaking gas line (I just called SDG&E while they took it up in committee). I have other clients who will make offers on a few short sales at a time. Again, if they are unable to sell in a timely manner, you have no real risk.

To esmith:
I often disagree with you ma’am but your suggestion of strategy is right on.

To patientrenter:
I really don’t think you have enough information to make those assertions. Lots of people who are perfectly capable of paying the mortgage on a $400,000 loan value are not likely to have an easy time saving an additional $100,000 for an 80% financed option.

Also, most of the reo’s I see (granted this is anecdotal) are not people with 5 or 10 percent cash purchases, with 30 year fixed loans, buying when PITI is comparable to rent.
Most appear to be people who financed 100% and/or bought when PITI was 2 times rent and/or were using a creative lending product.

How do you define one’s ability to afford something?

[urbanrealtor]

To Scarlett:
The things SD and sdr are saying are pretty much right.
Not a commitment until the contingencies are up.
I missed much of the conversation tonight because my buyer was dropping a verrrrry slooowwww moving reo when an older offer she had made on a short got approved by the lender (same lender ironically; you think they would have noticed). We were within contingencies and the reo deal had an asset manager who was out of touch with California. He wanted 3 bids before fixing a leaking gas line (I just called SDG&E while they took it up in committee). I have other clients who will make offers on a few short sales at a time. Again, if they are unable to sell in a timely manner, you have no real risk.

To esmith:
I often disagree with you ma’am but your suggestion of strategy is right on.

To patientrenter:
I really don’t think you have enough information to make those assertions. Lots of people who are perfectly capable of paying the mortgage on a $400,000 loan value are not likely to have an easy time saving an additional $100,000 for an 80% financed option.

Also, most of the reo’s I see (granted this is anecdotal) are not people with 5 or 10 percent cash purchases, with 30 year fixed loans, buying when PITI is comparable to rent.
Most appear to be people who financed 100% and/or bought when PITI was 2 times rent and/or were using a creative lending product.

How do you define one’s ability to afford something?

[urbanrealtor]

To Scarlett:
The things SD and sdr are saying are pretty much right.
Not a commitment until the contingencies are up.
I missed much of the conversation tonight because my buyer was dropping a verrrrry slooowwww moving reo when an older offer she had made on a short got approved by the lender (same lender ironically; you think they would have noticed). We were within contingencies and the reo deal had an asset manager who was out of touch with California. He wanted 3 bids before fixing a leaking gas line (I just called SDG&E while they took it up in committee). I have other clients who will make offers on a few short sales at a time. Again, if they are unable to sell in a timely manner, you have no real risk.

To esmith:
I often disagree with you ma’am but your suggestion of strategy is right on.

To patientrenter:
I really don’t think you have enough information to make those assertions. Lots of people who are perfectly capable of paying the mortgage on a $400,000 loan value are not likely to have an easy time saving an additional $100,000 for an 80% financed option.

Also, most of the reo’s I see (granted this is anecdotal) are not people with 5 or 10 percent cash purchases, with 30 year fixed loans, buying when PITI is comparable to rent.
Most appear to be people who financed 100% and/or bought when PITI was 2 times rent and/or were using a creative lending product.

How do you define one’s ability to afford something?

[Scarlett]

Cash flow criterion works, Patientrenter!
[quote=patientrenter]
Scarlett, I am sure that you are a wonderful person, but if it would take you “years and years” to save 10% of the price of the home you want to buy, then you cannot afford it. The only way you can “afford” it is if its price only goes up, not down. That is never guaranteed. It is widespread denial of the simple ‘cash flow’ criterion for affordability that got the entire economy into its current fix.[/quote]

We have $170K income and excellend FICO scores. If we can’t afford a decent 4 br house that now goes for 550-600K, how many can then? By “years and years” I meant more like 5 years in the current conditions, playing it safe by first putting away money for college and retirement, before saving for down payment.

I am paying rent of $2700 and save ~$1000 per month, after retirement, college fund savings. I think in terms of cash flow, assuming steady income, it works just fine. With $3600 total PITI and 10% down, I could buy something quite decent right now, instead of waiting those 5 years. I don’t care much if the prices don’t go up, though it would be nice.

What if in 5 yrs the rates are over 10-15% and the prices haven’t dropped dramatically (though they probably would, with those rates)? I may not be able to afford the monthly payment then, even if I have 20% down. Why wait (except for prices to decline further)? Why should I turn off all the other savings and live in a crappy place in order to save that those money in couple years instead? What’s wrong in this case to buy now with only 10% down?

I can tell you what’s wrong. You are right, it shouldn’t take us years to come up with an extra 10%, when you have 170K yearly income, even with that high of a rent. The house market is still so much out of whack. The prices should be HALF of what they are now!!! Ok, maybe not quite half, but at most 66%. Then yes, I’d have 20% down right now. Well, I am waiting, maybe they will go down that much in a couple years. I think they will.

Scarlett

[Scarlett]

Cash flow criterion works, Patientrenter!
[quote=patientrenter]
Scarlett, I am sure that you are a wonderful person, but if it would take you “years and years” to save 10% of the price of the home you want to buy, then you cannot afford it. The only way you can “afford” it is if its price only goes up, not down. That is never guaranteed. It is widespread denial of the simple ‘cash flow’ criterion for affordability that got the entire economy into its current fix.[/quote]

We have $170K income and excellend FICO scores. If we can’t afford a decent 4 br house that now goes for 550-600K, how many can then? By “years and years” I meant more like 5 years in the current conditions, playing it safe by first putting away money for college and retirement, before saving for down payment.

I am paying rent of $2700 and save ~$1000 per month, after retirement, college fund savings. I think in terms of cash flow, assuming steady income, it works just fine. With $3600 total PITI and 10% down, I could buy something quite decent right now, instead of waiting those 5 years. I don’t care much if the prices don’t go up, though it would be nice.

What if in 5 yrs the rates are over 10-15% and the prices haven’t dropped dramatically (though they probably would, with those rates)? I may not be able to afford the monthly payment then, even if I have 20% down. Why wait (except for prices to decline further)? Why should I turn off all the other savings and live in a crappy place in order to save that those money in couple years instead? What’s wrong in this case to buy now with only 10% down?

I can tell you what’s wrong. You are right, it shouldn’t take us years to come up with an extra 10%, when you have 170K yearly income, even with that high of a rent. The house market is still so much out of whack. The prices should be HALF of what they are now!!! Ok, maybe not quite half, but at most 66%. Then yes, I’d have 20% down right now. Well, I am waiting, maybe they will go down that much in a couple years. I think they will.

Scarlett

[Scarlett]

Cash flow criterion works, Patientrenter!
[quote=patientrenter]
Scarlett, I am sure that you are a wonderful person, but if it would take you “years and years” to save 10% of the price of the home you want to buy, then you cannot afford it. The only way you can “afford” it is if its price only goes up, not down. That is never guaranteed. It is widespread denial of the simple ‘cash flow’ criterion for affordability that got the entire economy into its current fix.[/quote]

We have $170K income and excellend FICO scores. If we can’t afford a decent 4 br house that now goes for 550-600K, how many can then? By “years and years” I meant more like 5 years in the current conditions, playing it safe by first putting away money for college and retirement, before saving for down payment.

I am paying rent of $2700 and save ~$1000 per month, after retirement, college fund savings. I think in terms of cash flow, assuming steady income, it works just fine. With $3600 total PITI and 10% down, I could buy something quite decent right now, instead of waiting those 5 years. I don’t care much if the prices don’t go up, though it would be nice.

What if in 5 yrs the rates are over 10-15% and the prices haven’t dropped dramatically (though they probably would, with those rates)? I may not be able to afford the monthly payment then, even if I have 20% down. Why wait (except for prices to decline further)? Why should I turn off all the other savings and live in a crappy place in order to save that those money in couple years instead? What’s wrong in this case to buy now with only 10% down?

I can tell you what’s wrong. You are right, it shouldn’t take us years to come up with an extra 10%, when you have 170K yearly income, even with that high of a rent. The house market is still so much out of whack. The prices should be HALF of what they are now!!! Ok, maybe not quite half, but at most 66%. Then yes, I’d have 20% down right now. Well, I am waiting, maybe they will go down that much in a couple years. I think they will.

Scarlett

[Scarlett]

Cash flow criterion works, Patientrenter!
[quote=patientrenter]
Scarlett, I am sure that you are a wonderful person, but if it would take you “years and years” to save 10% of the price of the home you want to buy, then you cannot afford it. The only way you can “afford” it is if its price only goes up, not down. That is never guaranteed. It is widespread denial of the simple ‘cash flow’ criterion for affordability that got the entire economy into its current fix.[/quote]

We have $170K income and excellend FICO scores. If we can’t afford a decent 4 br house that now goes for 550-600K, how many can then? By “years and years” I meant more like 5 years in the current conditions, playing it safe by first putting away money for college and retirement, before saving for down payment.

I am paying rent of $2700 and save ~$1000 per month, after retirement, college fund savings. I think in terms of cash flow, assuming steady income, it works just fine. With $3600 total PITI and 10% down, I could buy something quite decent right now, instead of waiting those 5 years. I don’t care much if the prices don’t go up, though it would be nice.

What if in 5 yrs the rates are over 10-15% and the prices haven’t dropped dramatically (though they probably would, with those rates)? I may not be able to afford the monthly payment then, even if I have 20% down. Why wait (except for prices to decline further)? Why should I turn off all the other savings and live in a crappy place in order to save that those money in couple years instead? What’s wrong in this case to buy now with only 10% down?

I can tell you what’s wrong. You are right, it shouldn’t take us years to come up with an extra 10%, when you have 170K yearly income, even with that high of a rent. The house market is still so much out of whack. The prices should be HALF of what they are now!!! Ok, maybe not quite half, but at most 66%. Then yes, I’d have 20% down right now. Well, I am waiting, maybe they will go down that much in a couple years. I think they will.

Scarlett

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