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What is the real deal with short sales and auctions?

Posted by erinb007 (My Page) on
Sat, Mar 28, 09 at 21:00

Ok, I have been reading and reading and reading and have come to the conclusion that it is really hard to get a really good deal on either a short sale or an auctioned home. It sounds like there are all these behind the scenes things working against the buyer? Am I missing something, or for someone who needs this to be their primariy residence, are these "deals" really not that great? Especially if you don't have months and months to dilly dally with paperwork? Would the average buyer be better off just making lowball offers on regular homes and seeing if anything sticks?

Follow-Up Postings:

RE: What is the real deal with short sales and auctions?

I think it depends on what your definition of "deal" is?

In general, property being purchased at a foreclosure auction or an REO auction do require considerable more due diligence on the potential buyer's part than a traditional sale using a real estate agent.

The agent either has answers (or seeks them out) to buyer's questions saving the potential buyer a lot of research time. Also, most traditional sales allow for the potential buyer to bring in an inspector. Many foreclosures, auctions, and/or short sales do not provide for an inspection again putting more burden on the buyer.

Properties are available though for below market value. The tough question is often exactly what is "market value"?


RE: What is the real deal with short sales and auctions?

I think I see where you are coming from. Initially you think an auction is just that - then you find out that they have set a bottom price which usually hardly seems like a big discount.
Short Sales - you think the bank will let it go for what is owed. Only to find that what is owned is hardly a deal because there is zero equity or has lost value either due to the market or lack of maintenance.
Then you factor in all the other stuff, "as is", long turn around times.

I'm not super experienced but I think the occasional estate sale can be a good deal. If the house hasn't been let go too bad and the kids just want to unload and move on, the pricing will usually support a fast sale.

RE: What is the real deal with short sales and auctions?

I did fairly well with my short sale purchase.

I did have to wait an eternity, lucky for the bank I couldn't find a similar house despite looking non-stop during the waiting period. We harrassed the selling agent at least once a week. Finally getting her to call the bank and harrass them. They had to resend the short sale package (there has to be a reason, in the sellers case they were divorcing)

Then the Bank went under, but the loan agents were still employed working for the fed regulators. They issued their demands back, which was my purchase price, and I had 17 days and the seller couldn't have more than 40,000 in escrow fees.

The bank loan was more than twice my purchase price and he had a home equity account with 80K more that had to be cleared (luckily again at the same bank).

So short sales deals can be come by, but they take a far more active role to get the bank moving and get the selling agent to get contact with an actual loan agent.

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