Oregon Bank Short Sale
A bank short sale is when the Seller of the home is currently in default on the mortgage and is at risk of getting foreclosed on by the lender. The Seller is essentially asking the Lender to take less than what is owed to avoid having to foreclose and take the home back. It is costly for lenders to foreclose on a defaulting borrower so banks have been willing to work with Seller's that are defaulting on a loan that can prove they are in financial distress.
The idea is that the Seller is trying to do everything to help the bank avoid taking a larger loss than needed. Banks appreciate this attitude and have grown more accustomed to dealing with this type of situation since the market has been in a decline.
The banks take their sweet time responding to offers and make it a pretty uncomfortable position for a buyer. The wait can last up to 5 months for a response on any offers. This amount of time is taken because the bank has to go through a series of steps to agree to take a loss on a property. I won't go into the details but just touch base on the process.
The bank (generally) does not start the process until the Seller has at least one offer to consider. They first review the Seller's financial situation to see if they are really in financial distress. The financial information goes through review and approval.
Once the bank decides they will complete a short sale, they hire one, or many independent contractors to complete BPO's(broker price opinion) or a full appraisal. They want independent contractors to tell them the approximate market value of a home so they can take the best action for that situation. Remember that the banks are generally outside of the market area and would otherwise have no concrete idea of the current market value.
At that point, they look at the offer(s) that are in. They look at the net proceeds and determine which sale will result in less of a loss and determine whether any loss is necessary. Certainly, if the bank determines that the market value would actually allow for a profit and a short sale not needed, they would likely just foreclose on the property and put it on the market themselves.
The entire process is generally based on priority. Priority is given to those that are about to go to auction. If the auction date is creeping up, then that sale gets moved up in the priority ranking. Because so many short sales are being considered the process is extremely time consuming. A bank may chose to delay the auction date to accomidate a short sale, they may opt not to.
No guarantees. As a buyer, you could wait 5 months to be told NO. You can imagine how upsetting that can be.
Bank short sales are very tricky and can cause a lot of grief and wasted time. If a bank short sale is listed on the market, it may not be at a feasible price. If they are priced WAY below market, it can be assumed that a bank will reject it. However, you still have to wait out those months to get a rejection. That makes it CRUCIAL to have a realtor working for you that can help you determine if your offer, the listing price, or the circumstance would be worth your time.
If you are looking for a list of short sales in Jackson and Josephine Counties, click on the blow link for a complete report. http://www.landlinerealestate.com/REOs__Short_Sales/page_2128927.html
If you have questions about buying a short sale, or selling a short sale, please don't hesitate to contact Chris and I, we are happy to help.
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