Investor Buying Short Sales?

house short saleFor a long time we have completely ignored even trying to buy any short sale properties.  Typically the home owner decides to list the house with an agent they know and they just throw the property in the MLS with a super low asking price to attract an offer.  The bank will take two to three months to respond and if they agree the home owner, the bank and the buyer all have to agree to purchase terms.

We decided to make an exception, one day we saw a great banked owned REO property come up on the MLS.  We immediately made a full price cash offer and sure enough it went to highest and best and our offer was not picked.  Since it has fallen out of escrow, we re-submitted our offer, it went to highest and best again and we missed.

As I was pulling comps in the area, I saw a property that is similiar but was listed as a 2 bedroom, 2 bathroom.  It was a short-sale, but we decided to make an appointment to go look at it.  It turns out it was really a 3 bedroom, 2 bathroom and the property need substantial repairs.  We made a really low offer two months ago and have called the agent once a week.

The latest answer as of about four weeks ago, the bank wants to work with us and open escrow.  But the frusturating part is, we have heard the same answer for the last four weeks.  The bank is “working on it” and we will know soon.  I would assume, this is standard procedure and we do not have high hopes at all.  But if they accept anywhere near our original number it would be great!

With the latest update the agent just emailed today and said the homeowner has hired an attorney to assist him in the process to get the bank moving fast.  The bank told the listing agent that they will get back to her on Wednesday with further instructions.  What this means, I don’t know?

In the future, I think we will try the odd foreclosure, but with this kind of lead time, I really do not think you can make a business around it.  But if we get this property it will be an absolutely great deal!

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3 Responses to “ Investor Buying Short Sales? ”

  1. J Scott says:

    With the REO market in our area getting a bit more competitive the past couple months, we’ve been considering going after short sales and other non-traditional foreclosure properties.

    While the lead-time on getting these deals closed can be several months, making the offer only take a few minutes, and hopefully the listing agent will do 99% of the work with the bank.

    So, we’re considering the strategy of just making 1-2 short sale offers per week, and perhaps in a few months that will turn into a pipeline of 1-2 new properties per month (assuming we see a success rate of between 1:4 and 1:8).
    .-= J Scott´s last blog ..Staging #2: Pictures =-.

  2. Steve says:

    With short sales it sure seems like the prices aren’t as good as the REOs. It is also very hard to get inside of them to see them.

    That being said we have 10-15 short sale offers out there. I think 1:8 might be a big optimistic.

  3. Shawn says:

    We have purchased 2 properties to date that were short sales, although I believe both were same day close deals where a short sale investor had already done the leg work. Both deals went pretty smoothly and closed within 60 days. We currently have an offer in on another short sale. The listing agent informed me that the bank had approved a previous offer three weeks ago, but the buyer got tired of waiting and backed out. I’m hoping that our offer price is close to what they had already settled on and that the condition of the house and the market (there are currently 12 other active properties in the area for sale at different price points) will spur them to take our deal and run.

    Overall, I think if you can work a short sale into your offer mix it can’t hurt. But like you said, don’t try to bank on them. It’s a game of patience and waiting it out.

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