Four months ago Lisa and I wrote an offer for a home which was to be sold as a short sale.   Weekly, Lisa diligently phoned the seller’s agent for status.   The seller had an offer which was higher than ours and one which was lower, but all cash.  After four months, the bank came to a decision; the buyer with the higher offer got tired of waiting and we were up.

Unfortunately, after our buyer waited four months and due to the expiration of the home buyer tax credits, he felt the property was no longer worth what he offered. This is what often happens with short sales, by the time the bank is ready to come to a decision, the buyer is “over it”.

Then there is the other short sale -  the one  which I wrote the offer on Mother’s Day, making me late for brunch. The inspector recommended that we have the following additional inspections:

Heating & a/c – because it would not cool or heat
Plumbing – numerous deficiencies
Electrical – numerous deficiencies
Termite – a lot of dry rot noted

I ordered the additional inspections and the termite estimate alone was $15,000.  Of course some of the work could be done at a later date. But as fumigation is so invasive it should be done prior to moving furnishings and clothing into the home.  There were some other areas of immediate concern, such as a dishwasher which had been removed, a Jacuzzi tub without GFI rendering it useless.  

There was at least $10,000 unanticipated in immediate expenses prior to move in.  And prior to this discovery the home seemed like a great opportunity, but considering the $15,000 in termite work, which is customarily paid by the seller one has to rethink the purchase.  My clients took a couple of days to review the estimates and did decide to close escrow.

And of course I tried to negotiate a reduction in the purchase price for my client, but I was not successful. 

Things to keep in mind on a short sale:

*AS IS generally means AS IS

*AS the homeowner is losing the home, deferred maintenance is to be expected

*By the time the bank arrives at a decision, you may no longer be interested

Related Posts:  Short Sale Disclosure 
Learn why most Realtors dislike short sales