My new realtor states short sales are misleading

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Irvine_Kat_IHB

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The short sales are misleading because the seller may be asking $450,000, the buyer offers $450,000, waits several weeks for the bank to approve the short sale and then the bank denies the short sale. The realtor says there are a lots of short sales that are offering several thousand below what is owed on the house and the banks are most likely not going to approve the seller's asking price.



Does anyone agree? Should I stay away from short sales?



I'm looking to buy in Irvine or Lake Forest. Thanks!
 
some good info previously discussed here: <a href="../../../discussion/1431/">Irvine Housing Forums - Short Sale Fraud</a>
 
<p>Shorts are difficult to conclude. If you pursue one, you want to go after one where the bank has 1) either already approved the short and list price or 2) the bank has already been presented with one viable offer and countered with a price.</p>

<p>Banks don't get off their butt on a short until one "real" offer comes in and it will sometime take them quite some time to counter. Banks will take the realtor's tabletop appraisal into consideration but will usually do their own price analysis after they get an offer. That is often why there a wait of many weeks to hear back. Once they have done that analysis though, it becomes easier to obtain the property.</p>
 
Thanks Trooper and ipoplya. So if one is offering for a fair market price, the bank is more likely to approve. Therefore, if I see a short sale that is way below market price, that would be a big warning sign.



As for banks already approving short sales, I have only seen one or two properties that have pre-approval. That's too bad because I think not having the approval ahead of time will scare buyers away.
 
Is this the same as the price of a bank owned home? Where the price is dirt cheap. But when you call the listing agent. He or she almost always say they have tons of offers?
 
<p>REOs have been selling quickly of late. Once the bank sets its price, they don't normally mess around countering a bunch of offers and stringing out the process. If you offer their list, they will almost always take it.</p>

<p>Just had two REOs here in West Irvine go active on MLS within the past two days and they both hit escrow tonight. Banks asked, people offered, boom, escrow opened.</p>

<p>Irvine_Kat - a good example of typical short behavior is this gem that was profiled by IR:</p>

<p><img height="243" width="321" alt="" src="http://i-0.rfimg.us/photo/46/bigphoto/214/S524214_0.jpg" /></p>

<p><a href="http://www.redfin.com/stingray/do/printable-listing?listing-id=1534931">It came on to MLS</a> three weeks ago at $590K. Attracted a ton of buyer traffic and undoubtedly got a number of offers at that price. Tonight, the list price just got increased to $690K. The bank probably took a couple of weeks to determine the price they wanted after getting a couple of valid offers and finally got back to the listing agent / sellers. If someone were to come in at $690K, it is likely the house would sell.</p>
 
Hi ipoplaya,



No, I was not looking at bank owned homes, just homes listed as short sales but the selling price not pre-approved by the bank.



Regarding the W. Irvine short term you gave as an example, did the bank initially set the $590K price or the sellers?
 
<p>An interesting story about agent commissions.</p>

<em>You might also be interested to know that commissions are rising ever-so-slightly, not falling, largely because brokers maintain they have to work harder and spend more money in advertising and the like to sell houses in this market. Also, many brokers are charging so-called "administrative" fees because they say the volume of paperwork and legal requirements are such that their costs have multiplied over the years. </em>

<em><strong>I believe they should raise their commissions</strong> to cover these costs so sellers will know what they are paying, but most prefer to sneak in the fee when the seller is signing a listing agreement and doesn't pay much attention to anything other than the commission, if he pays any attention at all. Most sellers don't even question the charge when it appears on the settlement sheet, if they notice it then. But they should, and unless they were told about it upfront, they should refuse to pay it. I have, even when the agent said if I don't pay it, the broker will take the fee out of his share of the commission</em>



<a href="http://www.marketwatch.com/news/story/housing-market-slump-may-last/story.aspx?guid=%7B31AF8A6F%2D0FAA%2D48AD%2D8768%2DA246AE25EAED%7D">Housing market slump may last longer than most predict - MarketWatch</a>
 
<p>The bigger brokers have been charging these fees in the Miami area for quite a while. My sellers sure complained. Back when I had closings to do, at least.</p>

<p>By the way, I am seeing the frozenness of the housing/mtg glacier retreating by an inch or 2. Frankly, I think that it is real, but a temporary blip, before the next wave of resets hit, and the REOs start really being marketed. Sellers are really starting to reduce their prices, but not enough. Few have money to buy. My broker buddy who is mainly selling cruises has a few wannabe buyers. Some have up to 10% for a downpayment. Some have good credit scores. All could have easily been placed in a loan a year ago. Ironically, since house prices have come down 20% according to Case/Shiller, these people could probably acturally afford the payments now.</p>

<p> But there is something wrong with all of them. One is a waitress with a good downpayment and good credit scores, but she doesn't declare all her income. I said she better start, and he said, she doesn't want to pay the taxes. I said, if she wants to buy a house, she'd better.</p>
 
Kat



Short sales are often misleading only to the extent that often the list price is purely fictional. Once an owner is under water on their home, they dont care how much they get for the house any more so any list price that gets some action is all they are looking for. Thats why one day you will see a house at 950k and the next 750k. The fictional part is that the bank will likely never accept a price close to 750k but the owner gets you to notice the house. Thus the list price often has very little to do with what the home will eventually go for. Unfortunately the public Mls does not indicate whether a home is a short sale and thus many consumers are led to believe that this is what a lot of homes are selling for.
 
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