"A short sale is really a long sale", explained our realtor. She certainly nailed it. Last spring I found a new, lovely home not far from our old house, ideal for the next stage of our baby boomerdom. Smaller house, smaller yard, new infrastructure, insulated windows - after 24 years living with radiators, that alone was appealing. But when I walked into the sunny, state-of-the-art kitchen, real estate lust kicked in. I wanted this house. Not so fast - it was a short sale.
Monday, March 15, 2010
A short sale is a stage which precedes a foreclosure. The out-of-town owner had purchased this property at the top of the market, overpaying even for those crazy times. Both he and the tenants had run out of resources to pay, and there were two bank mortgages. That means this short sale was even more complicated, dealing with four entities. Real estate agents hate short sales, since the bank squeezes their commissions and so few of them close.
Our low ball bid was accepted. We had the house inspected without a contract Risky, but it got a good report card, so we agreed to buy As Is. Then the drama began. Bank #1 needed to talk to Bank #2. One bank was a descendant of the infamous WaMu; the other was Saxton, first absorbed into JPMorgan Chase, which then became Chase. Neither bank had a clue how to proceed and our scheduled July closing finally took place one day in early November. The hang-up was a negotiation between the two banks for $10K, which was accomplished in 5 minutes. It's just that it took four months for each bank to locate a person with authority to talk to the other bank. It's no wonder our economy is in shambles!
Most short sales fall apart because the buyers run out of patience, so my first piece of advice is just that. Be patient. You should never attempt this unless your move is optional.
Second to patience, you need extreme flexibility. It's really challenging to simultaneously organize your life when you might move and you might not. You can't put your house up for sale, since you have no idea when the short sale will come through, if it comes through at all. Then you need to be able to carry two houses, since you can't put it on the market and expect it to instantly sell. And if you own a house which you'll need to sell, you need to be fixing it up for the market knowing it you might not be selling it after all. This is all hard on one's sanity.
Bottom line is we bought a beautiful new home at a significant discount. It is a stressful way to make a move - don't attempt it unless you really love the short sale property, but don't love it soooo much that you become irrational.
We had a hilarious denouement. We'd lined our mortgage up in advance, knowing that the mortgage broker would sell our mortgage soon thereafter. When we signed the papers, the broker already had the name of the purchaser of our new mortgage: CHASE! Apparently even if they don't know how to do short sales, they still know how to buy mortgages.