Short sales? Is it worth the wait?

Question

What are your thoughts and opinions on short sales? Have you found the time and effort to be worth it? Does anyone specialize in buying short sales?

Brett Goldsmith · Answer

It's worth it when it works out, at times you can hit home runs. Other times, you don't. Short sales are speculative transactions and many people dig themselves into a big whole because they don't know how to truly audit a short sale transaction, investor guidelines, etc. It saves a lot of time to know what you're doing in these types of transactions. Many people just shoot in the dark without knowing how the true mechanics of a short sale work.

Chinmay J. · Answer

There is always a little bit of luck involved every time a deal goes right, but like @Brandon Turner says, you have to put yourself in the position to get lucky by taking action. I will also say that Christopher Phillips is a highly knowledgeable poster when it comes to Short Sales, and has given some valuable insight on this topic over the years. His insight definitely helped me in one of the SS that i was considering a little while ago. I eventually walked away from it.

Ian Walsh · Answer

It is the same as any other lead source. If the numbers make sense, then it is worth waiting.

Russell Brazil · Answer

Many short sales these days wont even sell to investors. Im seeing more and more with notes for owner occupant buyers only. Banks are no longer looking to take a loss so someone else can profit.

Scott Graham · Answer

@Chinmay J.@Christopher PhillipsI appreciate the feedback guys! I guess we may have gotten lucky on the short sale that came our way. But we will see what the bank has to say!Best,Scott

Christopher Phillips · Answer

@Scott GrahamNot really enough margin in most shortsales to flip them.Banks are pushing to get as close to market value as possible, which doesn't leave much room for rehab, closing costs, and profit.

Chinmay J. · Answer

I found found that they at least used to be well worth the wait (back in 2008, 09, 10, 11) if you are going to live in it. Inventory is lot slim these days compared to the hay day of the Great Recession, but be prepared to wait forever if you are buying, and it can be very frustrating as an investor, as you are losing other deals focusing on short sales.

David Faulkner · Answer

I've personally never had much luck with them. Takes the bank a long time to get back to you, which I wouldn't necessarily mind, but then once they do get back they get back with a crazy, unrealistic price (IMO), so it ended up being a waste of time. I've heard of a few what I would consider less than honest investors put in a high price, around retail, for a property with no intention of closing at that price, then once they get into escrow, use the inspection to try to re-trade the deal back down to a good price for them, and then walk if they don't get it. They tend to do this sort of thing a lot on MLS listed properties too, especially if they think the listing agent is not too bright or experienced. Basically taking a listed property and using underhanded tactics (IMO) to try to turn it into essentially an off market deal. These are chicken S%&t tactics if you ask me personally, but these are the methods I've heard of.

Katherine Wolff Grote · Answer

I am a real estate agent that specialized in short sales for 2 years. I wish I could have those 2 years of my life back. They can be ugly. I had one that took 18 months to finally close.But as already been mentioned above, it depends what your plans are, where you're located, how long the property has been on the market, etc. We've also purchased short sales for our investment company for rentals. Although arduous, it was worth it.

Bill F. · Answer

@Scott Graham I've only made offers on short sales since January, but that is partly a function of a market oddity in my area and I buy them for rentals so your mileage may vary. I make $1-2k short of my highest and best offer, which usually means about 15-25% below listing, as soon as they pop on the market, then sit back and wait for the gears of the bank's bureaucracy to grind away. Most have come back and had a negotiator come back and tells me I need to pay the list price. (Great negotiation on their part). I counter with the $1-2 K raise and they reject it. I have had a few either accept my first offer or my counter. Its a slow process, but I think that's part of the advantage. Not a lot of investors are willing or able to wait the 2-5 months for a response from the bank. If you want ones that may make good flips look for short sales that have been on the market for 90+ days. That usually means they have had one or two offers fall through, which could mean the bank may be more motivated to get rid of them or the bank is a pain to deal with.