Tips on Buying a short sale townhome?

[Jaepheth]

I'm looking to buy a townhome closer to where I work, and I found a place that seems to meet my needs.

It's a short sale, been on the market for 237 days, and needs a bit of cosmetic work done. Needs new paint, a bunch of cabinet knobs replaced, a door repaired, a fan repaired; and that's just the initial walk through.

List price is 80K (down from 83) and per sq ft that seems to be fair for the area, but the average sale price for other townhomes in that division is more like 77K

My understanding is that with a short sale, there won't be counter offers, and no repairs done by the seller.

So how do I determine what to offer?
Any tips you veteran property buyers can offer?
This will be my first home purchase.

 

[EagleKeeper]

A short sale is also dependent on acceptance of your offer from whom ever holds the note. Not just the seller.

The offer from you should take into account the fair market value of the neighborhood.
Look at what you have at the property you are interested in vs the others that were sold. &&K may be the average, but if one sold for 80K does it have the same stuff you are looking at. Or is it a 75K house that is the same. You need to also figure out what expensive repairs may exist, both before you make the offer and also after an inspection.
Talk to the people that purchased an equivalent place; find out the price and condition that they took.

A day or two of research can save you 5K or more.

For of the other concerns, I can guess an answer.

• From the seller, no - they just want out - short sale will mean the note holder eats the loss, not the seller.
• From the note holder, it may be possible for a counter office.

Repairs may not get done; but a price adjustment may be able to be arranged to provide cash for your new note to cover items.

You never know until you ask.

If you come in close to the note or very low ball; the note holder will keep you stringing; feeling that where there is one buyer, there may be more coming down the pike.
Be prepared for 3-12 months wait time.

 

[Whoozyerdaddy]

"My understanding is that with a short sale, there won't be counter offers, and no repairs done by the seller."


There could be counter offers. It depends on what the bank says when the seller presents your offer to them. It's unlikely that a seller in this situation will agree to any repairs but you can ask for it if you want. Probably won't get it but if it's important to you toss it in. You're more likely to get a price break than a repair however.

A few things to remember:

1. It's ok to low-ball the offer.
2. Be patient - The bank will hold out for the best possible offer until foreclosure looks imminent.
3. Don't stop shopping. Keep looking for other deals. Make other offers.
4. Don't fall in love with anything that can't love you back. Don't get hooked on one property.
5. See if you can find out where the owner is re their payments. The further along in the foreclosure process they are the more likely the bank is to entertain offers. They don't want the house back.

 

[SandEagle]

low ball it. i'd offer 60k

 

[alkemyst]

With any property, it's worth what you feel it is. To get that value you must know the area and your budget.

In a short sale situation there is a ton of things to know and be 'insured' on. Many people once in contract have had many key items of the property removed by the time the original owner moved out. You'd want a good agent and house inspection.

The best way to judge either is by previous customers. Most house inspectors do crappy jobs being that they usually put tons of disclaimers that they are not responsible for anything. Find one that's done a good job and found issues that they were able to get corrected.

 

[richardycc]

townhouse as in a condo? if so, you want all the condo fee paid before closing, as in "clean 6D".

 

[jlee]

Tagged. I'm hoping to buy something in the next year or two and there are a lot of short sales on the market...

 

[jtvang125]

low ball it. i'd offer 60k

Just because it's a shortsale doesnt mean the bank is going to dump it at any price. They're still going to do a BPO and likely will only accept something close to that amount.

Also the seller has to approve of the offer before submitting it to the bank. Believe it or not some sellers will still be attached to the property and may get offended at the low offer and refuse to forward it to the bank.

Success rates with shortsales are much better now but there are still a lot obstacles to overcome.

My house was a shortsale. Listed at $170k to entice offers. Market price for the area was $195-200k. I offered $190k. 2 months go by and finally got a reply. Was told higher bidder at $198 walked, probably because they found something else already. I was next highest bidder and since I had no good leads at the time I took it.