Insulted

Discussion in 'Teacher Time Out' started by FarFromHome, Nov 1, 2010.

  1. FarFromHome

    FarFromHome Connoisseur

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    Nov 1, 2010

    My house is for sale right now-we're actually trying to do a short sale. Because a short sale is more complicated and I'm moving soon, we have the house priced very low. With the market dropping and the lower price, it's almost $50,000 under what we owe on the house. We also recently dropped the house $10,000 under what we started off listing it at.

    Well, we got an offer today. The offer is $20,000 under the asking price!!! And they want us to make repairs also!

    I know with a short sale, the bank is the one who has to accept it. But I just can't imagine them accepting almost $70,000 less than what we owe. We've put a lot of time and money into this house and made a ton of improvements. I just feel really insulted that they would offer that much less and still want improvements done too.

    Any tips or suggestions?
     
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  3. Caesar753

    Caesar753 Multitudinous

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    Nov 1, 2010

    Don't take it personally. The market just isn't what it used to be.

    We bought our house for 100k. After concessions for repairs and closing costs, we ended up paying something more like 96k.

    Our house was listed for about 300k a couple of years ago.

    It's a great house and I love it. In this market, however, it's just not worth 300k. Our offer of 100k isn't based on how awesome the house is, but on what the market says is reasonable for this house in this neighborhood at this time.

    If you don't want to take their offer, don't. There will be other offers. Keep in mind that this offer might be as good as it gets, though. The market is bad in lots of places.

    If I were in your position, I'd sign back a counter-offer a few thousand less than asking price and eliminate any sort of repairs or closing cost concessions.
     
  4. FarFromHome

    FarFromHome Connoisseur

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    I guess it bothers me because if we weren't doing the short sale, it would be listed around $127,000 from when we had a realtor appraise it for us. (Which I know could change if we had someone besides a realtor.) I don't know if the bank will approve an offer that's about $50,000 under what the house is appraised for.

    I haven't really got to talk to my realtor yet, because we had someone else walk through the house tonight. I'm thinking if we submitted a counter offer, we would probably ask for at least $95,000 still, but as-is.

    I keep telling myself to not worry about it since we're doing the short sale. But when you've lived in a house for a few years and have done a lot of work to it-it's special to you. I think I'll just have a hard time letting go of my first house!
     
  5. MissWull

    MissWull Cohort

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    Nov 1, 2010

    Wow. Ya, don't take it the wrong way...it just depends where you live and what the competition is.

    My husband and I bought a short sale this past May, but we paid almost $10K over what they were asking (which was low to begin with) but we had also been out-bid everywhere else we put in offers, so we had to have a strong offer our first go.

    Try not to worry too much, because it is a short sale the bank will do all the dealing. But I could imagine it must be special to you as well, because it was your home for the past years.
     
  6. Major

    Major Connoisseur

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    Nov 1, 2010

    A short sale will really hammer your credit rating ....... but I'm sure you know this...:)
     
  7. FarFromHome

    FarFromHome Connoisseur

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    Nov 1, 2010

    Thanks for the new perspective-I think some of it is just realizing that I won't see this house again! I get really attached to things-so that especially applies to my first house.

    I know the short sale will hurt our credit. But we're already living in two separate households, so we can't afford to keep the house. We tried renting at first, but we didn't have anyone interested after several months. With how much the market has dropped, we would be paying a lot out of pocket each month for a renter. We weren't able to just sell it ourselves since we owe more than what it's worth right now. We figure the credit hit won't be as bad as if we had to foreclose. And we don't plan on buying a house again for a long time after all of this!
     
  8. Major

    Major Connoisseur

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    Nov 1, 2010

    :hugs::hugs:
     
  9. Kindergarten31

    Kindergarten31 Cohort

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    Nov 3, 2010

    Our market here in Florida is awful for the seller. I need to sell my Mom's house ( she passed away) and it is an older house, but has 3 bedrooms, two baths, dining room, living room, Florida room, two car garage plus an efficiency apartment. 3 or 4 years ago, it was appraised at around $250,000. It has been sitting empty (but kept up) for 3 years. We had a real estate agent come out and said we need to put about $15,000 of work into it, which he said we might not get back, or sell it as is for $85,000. I cried--not for the money, but the sadness of the devaluation of a nice house (maybe the money alittle!).
     
  10. Caesar753

    Caesar753 Multitudinous

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    Nov 3, 2010

    The same thing is happening all over where I live, which is one of the cities that was hit hardest during this mortgage crisis.

    My best friend bought a house two years ago for just over $250k. Her neighbor's house (identical model) was recently appraised at $110k. They are walking away from their house.

    Another friend owed around $280k on their mortgage. The houses in their gated community are selling for $70k. They are also walking away from their house.

    The situation is terrible for people who already had houses...but it's pretty great for those of us who didn't. When my husband and I first moved here, there would have been no way for us to afford a home. Median home prices were around $350k. Even a condo would have been $180-200. If we would have been able to have afforded a house a few years ago, we might be in a bad situation right now. As it is, though, we were able to get in when prices were at their lowest (so far).
     
  11. TeacherNY

    TeacherNY Maven

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    I was going to say don't take it personally. I was a bit insulted that when we wanted to refinance a few months ago, the appraiser said our house was worth 230k and we paid 260k! I was so mad at the guy but then I realized that it's just the market right now and hopefully it will get better so we can refinance.
     
  12. FarFromHome

    FarFromHome Connoisseur

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    Well, I was able to meet with my realtor. He says there's only about a 20% chance that the bank will take the offer-because it is so much lower than what the house is worth. But we accepted it-because it's going to let us get the process started. He said the bank will look over everything and tell us they won't take that offer, but they would take ___________ (insert value). Then we would have a pre-approved short sale for whatever the bank gives us as the price. If the people who gave us the offer don't want to pay that much, we just need to find someone who will. Then the process will be much shorter from then. So that makes me feel a lot better about everything.

    Now I'm just working on my hardship letter!
     
  13. Sheila

    Sheila Comrade

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    Nov 3, 2010

    Why does a short sale hurt your credit? I rent so this is news to me. We were considering buying a home.
     
  14. mmswm

    mmswm Moderator

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    Nov 3, 2010

    A short sale is a settlement in which the bank agrees to let you sell your house for less than what you owe, and not come after you for the rest. You walk away without paying for an amount of what you borrowed. As in any case when you don't pay back your debts in full, this reflects poorly on your ability and/or willingness to pay back what you've borrowed. Future lenders will look at you as a higher risk, because you've already shown that you can walk away from a debt, so you're more likely to do it again.

    A short sale is not considered as bad as a foreclosure, but it's still a hit against your credit.
     
  15. MissWull

    MissWull Cohort

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    Nov 3, 2010

    What's a "Florida room"?
     
  16. mmswm

    mmswm Moderator

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    It's similar to an enclosed porch, but it's a full room in the house. The idea is to get as close to the outside as you can, but still have the comfort of a/c.
     
  17. MissWull

    MissWull Cohort

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    Oh, I see. Kind of like a sunroom?
     
  18. mmswm

    mmswm Moderator

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    Almost exactly like a sunroom :)
     
  19. Peachyness

    Peachyness Virtuoso

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    Far, we purchased this house through a short sale. As buyers, we put in as low of an offer that we could. Not to be horrible perople, but because we know that in this economy, the asking price was still ridiculously too high. We KNOW this house is worth WAY more (newly remodled kitchen, newer AC, pool, etc), but in this economy, well... it is what it is. So, we offered a much lower amount. The owners accepted. The bank declined and counter-offered an amount that was even HIGHER than what they were originally asking for! We though, what?? That's insane! We counter-offered our oringial amount by only $5000 and we also added that they must pay part of the clsoing costs. See, we knew the bank was trying to get us to offer a bit more. Reasonable seeing as how they want to get as much as they could.

    So, we got the house. And, shortly after we got it, the house value dropped to exactly what we paid for and has been sitting steadily there. GOOOOD thing we didn't pay a penny more.
     
  20. FarFromHome

    FarFromHome Connoisseur

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    I was upset we already lowered the price a TON to account for the market and it being a short sale. We had it listed almost $50,000 under what we owe. We tried to price it really competitively since I'm leaving next month and my husband is already at our next base. So our house was already priced low and then they offered $20,000 less and wanted $5,000 for repairs. (Not that I think we even have $5,000 worth of things that need to be repaired!) We're thinking the bank will come back with a higher price for them. I'm just happy we're getting the process started right now!
     
  21. Emily Bronte

    Emily Bronte Groupie

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    Nov 6, 2010

    A short-sale on your credit report will drop your score 300 points or more.
     
  22. FarFromHome

    FarFromHome Connoisseur

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    We don't have any other options. We already tried to rent for a while, and had no one interested. With the military, we can't choose to stay here. We are already paying for two separate households since my husband has moved to our next base. So, we decided to do a short sale rather than end up with a foreclosure when we couldn't afford two houses.
     
  23. sue35

    sue35 Habitué

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    I have a question. If someone is selling their house via short sale why would they not accept an offer if it is really up to the bank anyway. Why does the owner of the house even get an offer, why doesn't it go right to the bank?

    Clearly I know nothing about buying a house so I apologize if this is a silly question:) What is the difference between a short sale and a foreclosure?
     
  24. Caesar753

    Caesar753 Multitudinous

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    I'm not sure why the offers go to the owners. I agree that it seems like an unnecessary step.

    From what I understand, a short sale is when you are selling your house for less than you owe on it. You owe 200k and you sell it for 150k. The bank agrees to this, but they usually retain the option to sue you later for that extra 50k. A short sale can be good because you're only being held liable for that 50k, and in many cases the bank will forgive it altogether.

    With a foreclosure, the bank is retaking possession of your home because you are no longer making payments on it. This means that if you owe 200k on your house, your bank takes it back. You don't pay any of that 200k. That's why it hurts your credit so bad. According to my friend who is foreclosing on two houses right now (don't ask...), their lawyer told them that a foreclosure is better for some people because the bank can't come back and sue you later for the 200k that you owe on it.

    I really don't know if I'm right about all this. It mostly seems to be what my friend has been telling me. I hope someone else can clarify.
     
  25. mmswm

    mmswm Moderator

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    Quite the opposite. A short sale can drop your credit by at most, 300 points. More typically, a short sale will cause your FICO score to drop between 100 and 300 points, with the average being much closer to 200. Foreclosure, on the other hand, will drop your FICO score 200-300 points or more.

    If your home is in foreclosure, that means you're at least 90 days late. That alone drops your credit score. Once you go into pre-foreclosure, the score drops even further. However; if a homeowner agrees to a short sale before the mortgage is actually delinquent (such as farfromhome is doing), the damage can be less than 100 points.
     
  26. FarFromHome

    FarFromHome Connoisseur

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    We had to counter offer to make sure it's "as-is." You're not making any money off of it, so the seller usually would not be making any repairs on the house. Otherwise, I agree. It's all up to the bank, so that's why we didn't change the price that they offered.
     
  27. mmswm

    mmswm Moderator

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    It all goes back to the FICO score. The more the borrower defaults on, the harder the hit to his/her credit report. It's much worse to default on $100k than $20k. The bank takes less of a loss, and that reflects in the credit score. The owner gets the first chance to decline the offer in an effort to protect his or her overall credit health.

    Cassie, you are right about the option to sue though. For some people, who are already in pre-foreclosure status, the difference in the affect on credit scores is negligible, so the added risk of a future judgement on top of the short sale isn't worth the risk.
     

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