Expert: Connie Wildasinn-Broker,GRI,Realtor® - 8/13/2010

Question
QUESTION: I don't know exactly what a short sale is but I want to know one thing. There is this house that is a short sale and it has several offers. The house is bank-owned and going into foreclosure. It was sold back some time ago and supposedly didn't pass credit, so it's been relisted. However, the price has been drastically reduced from the original $62500 to 45000. There are 4 offers on the table and I want to know what I would have to bid to get it. Please let me know asap. P.S. It needs a lot of work but is in a very desirable neighborhood.

ANSWER: Hi Ester....

Ok... you are confusing verbiage ...


A short sale is still owned by a person - they are typically behind in payments, some facing foreclosure, but retain (for now) the title to the property.  This deal needs the Sellers Bank to OK the sale because they will be taking a loss on the monies that were loaned to the seller... hence called a 'Short' sale

Bank-Owned: this has ALREADY gone through FORECLOSURE... there is no 'person' holding title... they have lost their home and it is now owned by the Bank and is part of their inventory of real estate that needs to be sold - typically at a discount. They want the property to MOVE quickly to the HIGHEST BIDDER (Many times they list at an Auction Price to generate MULTIPLE OFFERS)

So you can't have bank-owned going into foreclosure... but you can have pre-foreclosure heading into bank-owned position.

The price drop you speak of... was done to get those 4 offers on the table... work with your agent ... figure out your limit... and submit your HIGHEST and BEST offer... the banks typically only work with one buyer at a time... they DO NOT respond to every Tom Dick and Harry who put an offer on the table... the work the Highest Net Offer to them...

Keep in mind lots of work sometimes translates into CASH only... work with your agent!

Good luck

---------- FOLLOW-UP ----------

QUESTION: Thank you for clarifying what a short sale is and I read online that short sales are not good because of some kind of debt that I will have to inherit if the bank comes after me for the balance of what they want. I am very confused and afraid now to make an offer. Would my agent be able to answer these concerns? Or would you just suggest that we look at another home that is in pretty good condition and very centrally located but not quite as desirable but very rentable because it has appliances, including washer and dryer and kitchen appliances as well as central air.  Please advise asap as you can see, I am not very knowledgeable in this area. Thanks.

Answer
Hi Ester...

you do not inherit the debt of the prior seller... the seller may get a 1099 and own income taxes on the unrecovered debt... so these can be a very good thing for buyers in todays market...

they just take a while to get approved...

do you have an agent you are working with? if you need a referral let me know ... I network all over the country and would be glad to find a great agent for you to work with...