Short sales, short tales
Several people have contacted me regarding a home they saw for sale in the Charleston MLS. I'm not surprised at the interest because the list price is so far below market. So my guess is, it's got to be a short sale even though the listing agent has not indicated that anywhere in the listing.
Too good to be true. Nah.
So I email the listing agent and yes, it is a short sale and "we have three of the strongest offers you can make and you are welcome to make an offer if you like."
Sure.
I've said it before, I guess I have to keep saying it. Short sale listings are bogus. The price does not reflect reality but the seller doesn't matter, it's the bank (or banks) that must agree. And they rarely do and if and when they do, time flies when you're having or not having any fun.
A little history. The house was purchased by an out of town investor at the peak of the market. In January of this year, it was listed for approximately $20,000 more than it was purchased for a couple of years ago. Since then, it was reduced by $10,000 in April, another $10,000 in May and finally, the price was slashed by $25,000 in September (so you can see why it appears to be a phenomenal value).
Here's the thing. Just because you are underwater (you owe more than the proceeds of the sale will bring in order to pay off your loan) and you don't have any additional funds to bring to the closing, the bank will not necessarily let you off the hook. You have to prove a hardship and not being able to sell your house for enough to pay off your loan is not a hardship. An out of town investor would probably have some difficulty proving a hardship and that's why those three strong offers will probably not result in a bank approved contract.
If you want to stay in your home and not face foreclosure down the road, more than likely a short sale is not the answer. You can and should renegotiate the terms of your loan with your lender and they now have a lot of incentives to do what is called a loan modification.
If you are a buyer, there are plenty of real listings of homes for sale throughout the Charleston real estate market that you can actually buy from motivated sellers at very favorable sales prices.
So why do they call them "possible short sale opportunities" anyway. It's rarely possible and what is the opportunity.
Photo courtesy of Flickr by beatboxbadhabit.