There’s a juicy conversation about short sales on Redfin’s Bay Area Forums, from the rare bird who successfully completed a short sale (which is when you buy a home for less than what is owed on the mortgage, requiring bank approval) in Pittsburg, California. He explains what it takes to win:
- Be promiscuous: I think most importantly, don’t come in expecting to get your first choice. Or your second. Or even your third. We made offers on four houses and were preparing to make an offer on a fifth when the third one finally came though. It’s kinda hit or miss with the banks, which are inundated with foreclosures and short sales…
- Don’t expect the pick of the litter: I had to change my mindset away from finding “the perfect house” to finding “a house we could live in” and then making offers on several houses before we finally got one.
- You don’t have a deal ’til the bank gets an appraisal: We made an offer (at the asking price), the bank then had the property “appraised” and counter offered, then we increased our offer $10k, and that was accepted after a few weeks.
- How long it takes depends a lot on the lender: I believe that different lenders are getting slammed with these short sales at different rates, and some banks are better equipped to deal with short sales than others.
Not earth-shattering rocket science, and we would suggest you could save yourself some time on all those offers by checking out how many banks have to approve the deal and how long they have to do it before the foreclosure auction — but for all the talk about short sales, someone who has actually closed on one is sometimes hard to find.