Shortsale question.

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    • #252895
      Luann Toth
      Member

      I was confused about why a certain house was listed as a short sale. I sent my buyers agent an email and his answer was kinda confusing. Can someone help me out here? I have made an offer of 387K on a home that was bought in 2008 for 420K. I don’t see how this could be a “short sale” it seems like at 387K, the bank would not be losing any money (assuming for the past 4 years these owners have made some of their monthly payments…)
      *
      My messege:
      =============================
      I had a quick question about this short sale. I have done some
      research and come to conclude that a short sale is a situation in
      which the owner of the house owes more on the house than it is
      currently worth. Due to a hardship the bank agrees to sell the house
      for a loss. However this confuses me when looking at this specific
      house.

      It was sold in 2008 for 420K. Now lets say that the owner put a super
      low down payment, maybe 5%. That would mean the bank loaned them 399K.
      It has been 4 years since that these people have been making payments
      on the house. I would imagined they paid off at least another 90K. The
      remaining loan balance should be around 310K. Our offer stands at
      387K. I have been conservative in my figures and assumptions and it
      still seems to me that the bank is most definitely not losing anything
      and in fact gaining money out of this sale. How can this be? How is
      this a short sale then and what excuse would they have now for not
      paying for repairs and such?
      *
      His response:
      ========================
      Looks like they took out a loan in 2008 for $378,000 and keep in mind, there
      are such loans as interest only mortgages and even the principal and
      interest loans during the first 10 years of the 30 year term are barely
      making a dent in the principal. *Doing some calculations based on a 4.875%
      rate which was about where things were at a handful of years ago, the
      principal in theory would be down to about $360,000, however keep in mind
      that the seller is responsible for closing costs and realtor commissions
      which would tack on about 8% in total for those expenses bringing the
      balance closer to $390,000. *Even in a small margin like this where the
      seller may sell the home for more than they owe however can’t pay for the
      entire expenses, this would still be considered a short sale. *Also for the
      fact that they are under financial hardship to.

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