Buying a short-sale house? 'Be prepared to be irritated, annoyed'
Posted July 11, 2013
Garner, N.C. — Leslie Ward laughs when she talks about the “ginormous” kitchen in her Garner house, an upgrade from her previous, smaller home. But getting her 2,400-square-foot dream home for nearly $78,000 less than tax value didn’t come easy.
Ward and her husband bought the home through a short sale and quickly learned that there’s nothing short about the process.
Short sales accounted for about 15 percent of all home sales nationwide in the first part of 2013, according to RealtyTrac. They're often used as an alternative to foreclosure when homeowners can’t pay their mortgage and owe more than the home is worth.
Instead of the bank taking possession of the home, the bank and homeowner agree to sell the home at a loss in order to lessen the impact on the seller’s credit..
There are benefits for homeowners, who can avoid foreclosure and minimize credit damage, and for house hunters, who can get a great deal. However, short sales can take months, and sometimes years, for approval.
Ward and her husband had to wait about two and a half months for the bank to accept their offer on the Garner home, even though they offered the full asking price of $205,000.
“We were literally just waiting for a yes,” Ward said. “We didn’t really understand why it was taking so long. We offered list price. What do you have to do to get an OK?
The Wards say they called the bank every three to four days to check on their offer. In the end, they got their three-bedroom, two-car garage dream home.
“If it hadn't have been a short sale, I don't know if we could have afforded (the house),” Ward said. "The deals you could get could be wonderful, could be great, just like ours, but you got to have a lot of patience. Just be prepared to be irritated and annoyed.”
Joan King says she learned “to wait, wait, wait” as she helped her son buy his first home – a three bedroom, two bathroom fixer-upper in Clayton, which was on the market as a short sale.
In February, the Kings offered $13,000 below the $107,800 list price. The bank countered three months later, in May, with $126,000 – $18,000 more than the original asking price. The bank and family eventually agreed on a price of $111,000 – $16,000 less than the home’s current tax value.
Despite the savings, King says the agonizing wait was not worth it. “It's just been a nightmare,” she said. "I would never do a short sale again."
Real estate attorney Todd Jones has handled numerous short sales and says it’s important to note that the term “short” has nothing to do with time.
"The short in a short sale really means that you're shorting the payoff on the secured interest on the property, not that it's a short process,” he said. “Someone coming in thinking they’re going to get a great deal in a short period of time is mistaken.”
Jones advises short-sale buyers hire a real estate agent who specializes in those types of sales and to “stay on top of the transaction to see it through.”
“If you don't, it just may never come to fruition,” he said. “It's possible to get your dream home. It happens, but the flip side of it is you may never get your dream home in that process."