Q. My friend told me about this house on ****. Can you check it out for me?
Let’s say the seller bought the house for $210,000 and got 100% financing. When they go to sell the house, they find the market value is $200,000. Once they factor in all the costs for selling the house and the difference in market value, they discover they owe more to the bank than they will get when they sell.
The seller stills owns the property but cannot sell because they would have to pay the bank that extra money. They will have to go to the bank and ask the bank to “forgive” them the difference. This is a complicated process that can take a long time. In North Carolina, only attorneys (or the owners themselves) are allowed to negotiate with the bank.
What this means to you as a buyer is that the seller doesn’t really know what the bank is going to do about this “forgiveness” of his debt. They may say yes. They may say no. And no one knows when the bank is going to respond. It could take weeks and even months to get an answer from them. In the meantime, your earnest money deposit is tied up and you don’t even know if the bank is going to allow the seller to sell the house for the price listed.
Which brings me to my next point…Just because the house is listed for a certain price, and the contract between the seller and the buyer is for a certain price, the bank doesn’t have to accept that sales price! It is not uncommon to wait for months to hear from the bank and when you do it is with a response that negates your contract price.
We really don’t have that many short sales anymore in this area. And frankly, it’s a special buyer that can hang on long enough and that is flexible enough with the price to make it work.
Lastly, most short sales are actually listed pretty close to the market value. In fact, the banks are requiring the sales price to be near the market value. So, they are really a “deal” anymore.
I’d recommend we keep looking for something else. With your lease coming up shortly, I don’t think you have the time to deal with a short sale.