Short Sale?
We offered a lower bid on property, owner countered and we accepted.
When get got to our agents office, she was on the phone away from us talking the seller's agent. Seller's agent told her that her seller was behind in mortgage. Our agent talked briefly about doing a short sale, and that the seller's agent would call the bank and find our information. Is this the correct procedure? One other note, The seller's agent told us that the seller didn't have enough for both the closing and the back amount due. We investigate that our bid was 2000 more then what's owed. and about 15,000 over the value of the home. could this just be a Stall tactic for the seller to raise the closing and RE funds? We are paying Cash so it would be quick close although we gave until the end of the month to close, also the seller's agent had us sign an extention of 15 day of closing.. I'm kinda confused and very uneducated with this issue. 
Why would you want to stay in a deal that you are paying $15,000 over the market value of the home?
The tax accessment was value that low. We live in an area where homes, 40-60 years old are selling 20-25% higher value even though they are appraised at a lower value. We haven't had the house appraised we have just had the tax accessment done. \which would have been done when the seller bought the house 2 years ago. [ Edited by melaina on Date 03/01/2004 ]
Has your real estate agent pulled comps, both sold and current listings similar to the home? I wouldn't base an offer on assessed value. With a cash deal, your closing costs should be minimal. Has your real estate agent given you an estimate of these costs? I am not trying to place all the responsibility on your realtor, however, that person is going to make a commisson. Your Title company should be able to provide you with their costs, based on the sales price.
tax value and market value are two different things. Tax value can give you a general idea of the value of the home but its best to find out market value[ Edited by demosthenes on Date 03/02/2004 ]
Melaina,
Dont get the Tax assessment, Appraisal, and Market value confused. These are three very different things and if you get them mixed up here, you will get all kinds of bad information.
A short sale is when a lender must take a discount on a loan payoff so that a house can be sold. It is a fairly common occurance. Especially when a homeowner is behind on their payments.
If the sale of a property does not get enough money to cover agent comissions, closing costs, loan payoff, late payment penalties, taxes, etc, then a "short sale" is required.
And, if you were wondering, my definitions:
Tax Assessment: Some number the county uses to calculate property taxes. (frequently nowhere near what the market value is.)
Appraised Value: What an appraiser thinks the property is worth based on recent sales of comparable property in the area. (Often, but not always, somewhere near the market value.)
Market Value: What the property is really worth and can be sold for. (This is the most important one. It also can vary quite a bit day by day.)
Has the seller been served by a lawyer from his mortgage company. In other words, has the foreclosure process officially started. Once the lender gets a lawyer involved the lawyer fees change daily and you can not tell what the owner really "owes" as a payoff.
How do you know what is owed?
Also, are there any other liens before the first mortgage.
A short sell is when someone negotiates with the lenders for a reduced payoff. If this was an investment for you and not an emotional primary residence - it would proably be a prime candidate for a SS and you would have the possibility of maybe negotiating with the bank for a payoff of 80% of the Fair Market Value. If you decide to pursue the SS, it is done correctly, and the bank and sellers are cooperative, you could negotiate a lot of equity in your new house. I do not think that your agent or their agent would be the person to negotiate a short sell for you. They are not going to try hard to reduce the purchase price so that they can get a reduced commission.
Brenda
Yes, we know what the realitor is charging us. We know that other houses in this development are market value between 180 - 200 and this one was first listed at 182 5 months ago and have been dropped to 175 and then 169 - we know the seller is into the home for 165 -
Therefore, we offered 165 and they countered at 167 and we accepted.- The bank has not served notice, we were
just told that the seller didn't have enough money for closing and the back money owed. And were told be the seller's agent they would have to call the bank to find out what the banks payoff is and what we can do. Just wondering if other people have run into these same issues. Thank you for all your help.