Got an offer on short sale....now what?

[loser104]

Ok, my real estate agent has fielded many verbal offers on my townhome, but none of them have materialized for one reason or another. He actually got a written offer today, which I read over and signed. Tomorrow he will be submitting it to my bank for approval. The potential buyer wants to take possession of it by April 5th, just a few weeks from now. My agent says that there is no way the bank is gonna move that fast, so plan on at least 60-90 days.

Can someone please explain the process from here on out. What timeframe can I expect for things to happen? If everything works very fast, how soon could I expect to be out of the house?

I believe the lender on my first will probably approve of it fairly quickly, but what about my second? Will they first have to contact me and negotiate with me before signing off on this short sale? I owe 150 on my first, and 30 on my second. Offer is for $30,000, so the second will not get anything. Should I just agree to a 5-10 year payment plan with no interest, just to make the process move along?

My ultimate plan is to file a chapter 7 in October when my 6-month income will fall below the cutoff for the means test. Would it be wise to enter into this payment plan now, and then follow thru with the BK in october? If I try and play "hardball" with the second, I'm afraid that might delay the sale and scare off the buyer, so that's why I'm thinking I should just settle quickly with the second.

I do understand that it would make much more sense to just NOT short sell, stay in my house all summer long rent-free, foreclose, then declare BK. But I'm trying to do the right thing, I feel really good about this short sale, I just cant see paying on a second mortgage for the next 10 years when I'm not going to be living in my home for more than a few more months.

[HHM]

Sounds like this deal is dead before it begins if the buyer wants possession by April 5th, that is NOT GOING TO HAPPEN with a short sale.

The process

1. Agent submits offer to bank
2. No one hears anything for a month
3. Agent calls, finds out it will be another month before a negotiator is assigned
4. Short sale negotiator is assigned
5. Bank comes back with counter offer
6. Buyer walks and you are back to square one
7. If buyer does not walk, and if buyer accepts new offer, then bank comes back to you with the short sale agreement placing conditions on your or you agent that cannot (or should not) be satisfied.
8. Deal falls a part.

9 out of 10 short sales never close.

Why are you wasting your time with a short sale anyway?

[loser104]

Yes, I've heard that about the majority of short sales fizzle out and never come to fruition. But I guess I'm somewhat hopeful that mine might just be that 1 out of 10 that actually close. If not, then at least I put forth my best effort to do the right thing. Not sure if it is wasting my time, though, I'm unemployed for now, and have nothing but time on my hands.

Seems like the biggest benefit of letting my home foreclose is the free rent for another 6-8 months. But, I'm still paying utilities ($300) and keeping up on my association dues ($115) each month, so I'm still spending about $415/month. Compare that to the apartments I'm looking at moving into, which with utilities will be costing me around $700/month. So I am saving myself about $1700-2300 total, not including any deposits. Well, I guess I just made a great case for letting it foreclose!

BUT, I feel better TRYING to sell it, albeit as a short sale. If this buyer walks, this place is going right to foreclosure anyway. So far, the first lender continues to tell me that they cannot or will not grant any extensions as far as the trustee sale/auction goes. Don't know whether they are lying or telling the truth as far as THEIR policy goes, but whatever. They told me that is HASN'T gone to their attorneys yet, but don't really know what that means......

[loser104]

And also, IF.......and that's a big IF, but if I do find some kind of employment in the next few months, I would really like to try and clean my financial mess up and avoid a bankruptcy. Planning for the worst, but hoping for better.

If I luck out and can get a short sale, just maybe I can negotiate my second mortgage down to less than 30% on the dollar, which if employed, I would be willing to pay, and it may not completely break me. Of course they may not agree to that, but that's something I can shoot for. Anythng to get that $30,000 second loan down to a manageable amount.

I'm then hoping to claim insolvency come tax time next year to avoid having to pay income tax on that amount that would be forgiven. I believe I could easily make that case, even if I had to consult a tax attorney or CPA. Then I would be home free.

I could then cash in my IRA's that I just started (so as to exempt them from the BK trustee if need be) and pay off my cc's ($10,000) at some point in the future, AFTER dealing with the tax man.

Yes, it would cost me more money to go this route ($19,000 if my math is right), but I would avoid a BK on my record, and get to keep my cc's for emergency use, and I could sleep better at night knowing that I did everything in my power to right the ship. I know, I know, I am such a dreamer, but I really do mean to do the right thing.

In the end, the more likely scenario is that this short sale will NOT go thru, my home will foreclose, forcing me to file BK to get that fresh start.

[loser104]

After many verbal offers, and finally a written one submitted this week, my real estate agent came today and took down the FOR SALE sign and his lock box. In the 3 weeks it has been listed, we had about 20 showings. Boy, what fun!

Now, I just called up a cousin who is a real estate agent, and he says that he has talked with several attorneys about this whole short sale process in his past dealings. He tells me that when it comes time to submit the short sale package (bank statements, pay stubs, tax returns, etc), that they do NOT do a look-back when it comes to bank statements, and that if I have a high bank account balance (and I do, about $12,000), that I should IMMEDIATELY withdraw 80-90% of that and put it somewhere else for the time being until this blows over, then deposit it back into my account AFTER the short sale is settled.

This sounds very shady to me, but he swore by it. I called up a BK attorney just now and asked if this seemed legit, and was told that they did not know if it would work for the short sale, but that it should not cause any problems when it comes to filing BK, as long as I deposit it back BEFORE I file. Said it would be easy to explain away to the trustee.

What say you? Probably should have called a real estate/foreclosure attorney......maybe I will.

[loser104]

Will DEFINITELY call a real estate attorney tomorrow! Verizon allowed me to prepay $500 into my cell phone bill/account. My car insurance would NOT let me do that, bummer.......... Don't want to do this with my utilities since I am probably moving at some point. Hmmmmmmmmm...........

[loser104]

Realize I'm doing most of the posting in my thread here, but I have some many things on my mind right now.

Called a real estate attorney today, and he said do NOT try to spend down anything in my checking account. If I have a high balance, then it would be in my best interest to just plead my case...........unemployed, no job in sight or anytime in the near future, down on my luck, must have savings to pay for health insurance and rent and blah, blah blah..........you get my point.

Guess I will just sit back and wait this thing out.