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Posted by JQ on January 5, 2008, 6:57 am
I live in the Inland Empire area of southern CA, which is notorious
for being a typical example of the excess and bust that the recent
housing mess has wrought.
I understand the basics of a Short Sale, and trust me there are plenty
of homes out here that will probably end up in that situation in the
near future, but this one sounded too good to be true.
A local canyon home, 2 car garage, view of the valley, pool, 4 bed, 2
full bath advertised for 485k dollars. The price was crossed out and
changed to 300k, and the following: "...this house is subject to Short
Sale so bring your imagination and patience."
Considering the very simple homes in my neighborhood were selling
(well they aren't selling, more like sitting) for nearly 300k, I just
had to ask what the catch is here. I didn't think that the price would
be dropped that low. Yes the house needs some work, nothing major (new
carpet in areas, new cabinets, some paint).
While we are really not serious about buying this home, we are trying
to learn about how this all works in regards to short sale homes being
sold at such a discount and what sort of dangers a buyer might encounter
in such a case. Thanks for any info.
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Posted by joetaxpayer on January 5, 2008, 1:24 pm
JQ wrote:
> Considering the very simple homes in my neighborhood were selling (well
> they aren't selling, more like sitting) for nearly 300k, I just had to
> ask what the catch is here. I didn't think that the price would be
> dropped that low. Yes the house needs some work, nothing major (new
> carpet in areas, new cabinets, some paint).
> While we are really not serious about buying this home, we are trying
> to learn about how this all works in regards to short sale homes being
> sold at such a discount and what sort of dangers a buyer might encounter
> in such a case. Thanks for any info.
There's the standard things to worry about, many of which a home
inspector should be able to find. Condition of roof, insect damage, dry
rot, etc.
In the case of a short sale, as long as the bank or holder of the
current mortgage is willing to release the liens for an amount less than
the full amount due, you should be ok. Really, that's what your lawyer
would do for you at (well, before) closing, he would ensure you have a
free and clear title only subject to your own mortgage, and whatever
easements (such as utility) that cross your property.
If I am the bank, I'd rather get $300K in cash against the note I hold
for $350K, than to have a property just sit there and run the risk of
vandalism, fire, etc.
There will come a time when the bottom has been reached, and it again
makes more sense to buy than rent, we just may not be there yet.
JOE
www.blog.joetaxpayer.com
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Posted by Chris Cowles on January 5, 2008, 3:53 pm
>
> The price was crossed out and changed to 300k, and the following:
> "...this house is subject to Short Sale so bring your imagination
> and patience."
Can someone please explain how the term "Short Sale" applies to real
estate?
--
Chris Cowles
Gainesville, FL
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Posted by joetaxpayer on January 5, 2008, 5:51 pm
Chris Cowles wrote:
> Can someone please explain how the term "Short Sale" applies to real
> estate?
It's when the sale price is less than the the current mortgage, same as
'upside down'. It's not the same short as selling a stock before you own
it. Just happens to be the sale word.
JOE
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Posted by Andrew Koenig on January 6, 2008, 12:30 pm
>> Can someone please explain how the term "Short Sale" applies to real
>> estate?
> It's when the sale price is less than the the current mortgage, same as
> 'upside down'.
I don't think that's quite right. I think the term "short sale" applies
when the sale price is less than the current mortgage *and* the mortgage
holder has agreed to accept less than the full balance to pay off the
mortgage.
I know someone who sold a house at a loss and had to come up with $20K to
pay off the balance of the mortgage. I don't think that counts as a short
sale.
I also know someone who bought a house as a short sale after the sellers had
failed to sell the house for nine months during which they had missed the
last four months' mortgage payments.
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