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Anybody ever purchase real estate that was subject to short sale?

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SacredCow Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 03:20 PM
Original message
Anybody ever purchase real estate that was subject to short sale?
I'm looking for a new place, and there are some condos in downtown Baton Rouge that I'm interested in.

They were completed just after Katrina hit New Orleans, so they all sold (many of them to corporate entities in New Orleans) for outrageous figures. Now, many of these companies have applied to sell them as short sales, as they overpaid for them (as did a lot of people who bought property in Baton Rouge in the Katrina panic).

As near as I can tell, it just looks like a few more hoops to jump through, and you might have to wait a couple of months to close. But I'm no real estate mogul- I'm just looking for a place to call my own!

Any words of wisdom would be appreciated!
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hvn_nbr_2 Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 04:02 PM
Response to Original message
1. What does "short sale" mean in real estate?
In the stock market, short sales are selling stock that you don't own, but that description doesn't seem to fit what you're talking about.
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flvegan Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 04:06 PM
Response to Reply #1
3. Nope, different.
A short sale means a property is distressed (facing or in foreclosure). The bank is owed far more than the property is worth marketwise. The bank cuts their losses by taking an amount that's (usually significantly) less than what's owed.

I did one today that the lender took $163,000 on a $250,000 loan (principal balance of $248k).
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flvegan Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 04:04 PM
Response to Original message
2. If the property is already with the realtor, it's likely that the short sale price
(what the lender will get rather than the full value of the mortgage) has already been approved by the lender.

This is a great opportunity if you get good value for money. Good luck.
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SacredCow Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 04:20 PM
Response to Reply #2
4. From what I hear, the possible problems won't be a big deal for me....
Two months to close? That's fine- I'm in no hurry...

Sold As-Is? They were completely renovated in 2005/2006 and by the look of them, they weren't occupied for very long. Some of the units could use a little painting and such, but nothing I couldn't or wouldn't do myself.

Lender can change terms at will? I'm guessing that if they do, it gives me the chance to walk away if I don't agree.


I think it could be a good thing- They're pretty neat condos. Views of the river from some units, nice kitchens with granite countertops, ceramic backsplashes, cypress cabinetry, stainless appliances...

Some details:
http://www.cjbrown.com/RLNet/Listings/ListingDetails.as...
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flvegan Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 04:24 PM
Response to Reply #4
5. Condos are especially hot for short sales.
See, if the lender forecloses, they're still out a couple hundred grand, lets say. Then, it goes into their REO stage where they have to sell it. They have to mark it down anyway to where the market level is for that comparable. Now, while it sits waiting to be sold, the lender (now owner) still has to make the condo association fee payments every month. That's another $200-$2000 each month, depending on the association. Condo sits a year, which is quite possible, that's $24k out of pocket. Plus they're on the hook for taxes and maintaining it. Hopefully, it doesn't get trashed on the prior owners' way out or while it sits on the market.
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SacredCow Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 04:30 PM
Response to Reply #5
6. Good info....
Much obliged! :hi:

I doubt it'll get trashed- the units in question are not occupied. I had a realtor walk me through a couple of months ago, and they're all vacant- no utilities even.

There's a condo glut in Baton Rouge- For what I may pay for this place, I could probably get a house (but I don't much want the hassle of a yard). The resale for condos is historically bad here, but as I said- I'm looking for a place to live, as opposed to something to flip.
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