5 On Your Side

Buying a short-sale house? 'Be prepared to be irritated, annoyed'

Posted July 11, 2013

— 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.

House Buying a short-sale house? 'Be prepared to be irritated'

“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."


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  • readme Jul 16, 2013

    I tried to buy a short sale and the deal fell through at the asking price because the bank didn't want to pay a few hundred dollars to fix the main water line so I could complete the inspection. A year later and it is still on the market. Again, some real journalistic value here would be to talk to the banks and find out what the deal is. They are a financial institution, and I can't fathom why they make bad decisions with money on the line like that.

  • -f Jul 12, 2013

    I should have also mentioned - in the past year, I sold two pretty nice rental properties. They were worth much more in 2006. So, I got beat up on selling them because of foreclosures and short sales. You win some... and you lose some.

  • -f Jul 12, 2013

    My wife and I bought a short sale house for over 1/4 million less than the tax value. It was very stressful and we almost thought the deal wasn't going to go through. It took three months and now that it is all done and said, we are extremely happy and sitting on a pile of equity with a 3.375 30 year fixed loan.

  • karrgal77 Jul 12, 2013

    what about all the people who have been responsible in paying their mortgage and then houses are sold in the neighborhood at a cut rate completing desecrating home values? Mine went down by $50K. So I should love short sales?

  • Its the who what Jul 12, 2013

    It does not sound like they had real estate agents involved in this process. Many times, people submit short sale packages directly to the bank. These packages include hardship info from the borrower who is behind along with other materials. Some of the people that submit these packages throw an offer out there like a fisherman throws a line in the water. The bank process the package to see if the person selling the home is even qualified to participate in a short sale. By the time the package gets approved and to the next person, they then begin their due dilligence of really finding out what the REAL value of the house is!! At this point you are at least a month in and it has not even gotten to a decision maker. That's why it takes so long.

  • rocket Jul 12, 2013

    "so lets glorify putting the screws to the original owners, and then bringing down property values because you got the house a cut rate price. good job!!!"

    The original owners put the screws to themselves when they stopped paying their mortgage.

  • kikinc Jul 12, 2013

    karrgal-It's not the buyers that screw the owners. The buyers aren't the reason the homeowners are underwater in their house. If anything, the buyers are doing them a favor. They help them avoid foreclosure. It's usually a win-win in everyone's favor. Definitely do some research into the definition of a short sale.

  • Brian Jenkins Jul 12, 2013

    I bought a short sell house in less than 30 days. No issues at all.

  • karrgal77 Jul 12, 2013

    so lets glorify putting the screws to the original owners, and then bringing down property values because you got the house a cut rate price. good job!!!

  • Lightfoot3 Jul 12, 2013

    We tried to buy a short-sale house, that needed some work. Offered them $2k OVER what they were asking. They countered with $40k OVER what they were asking! Needless to say, we walked away.

    After that, we found a nice house (not a short-sale) that had been on the market for 2 years because it was WAY overpriced. Very greedy sellers. Offered them about $100k LESS than asking price (yes, it was SERIOUSLY over priced). They came down about $15K, we went up about $15K, then nothing and we walked away. I checked on it some half year or so later. They sold for about $20k LESS then we offered. :) I guess their pride wouldn't let them come back to us.

    The market can be so strange.