The bank refused the offer I brought them, insisting on another $12,000. The buyer walked and the bank foreclosed. They listed the home at $125,000 AFTER already paying fees for the foreclosure. The house just sold today for $112,000. So how did they lose $62,000? Here’s the run-down.

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If you remember, throughout our relationship I spent hours trying to satisfy your demands. I took photographs and sent them to you and filled out all the paperwork you requested. I even managed to get the buyer to come up $2500 on an offer that really was above market value to begin with. I bent over backwards trying to please you. I really thought we had something together, but in the end you rejected me.

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When the bank sends out their Bank Acceptance letter, the dollar amount on the approval has been reduced by the following:

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Logically, the sweet spot on price should be where the buyer is getting a home at a little under market value (to make up for the hassle of a short sale) but where the bank is still netting more than they would if they foreclosed. In that case, all parties are benefited by the short sale arrangement.

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One woman did not hesitate, but pulled the trigger on herself. Addie Polk of Akron, Ohio was apparently overwhelmed by the fact that she could not make her payments and was going to be foreclosed on and she shot herself as sherriffs were trying to serve her the foreclosure notice for the 30th time.

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If I calculate only using Sold listings versus Active Listings, we have an 8.6 month supply still active. I believe that number is more accurate and really reflects what sellers are experiencing out there right now.

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I mentioned last month that we are seeing increased difficulties and decreased cooperation from banks. This month I am working with a bank that seems to be motivated to get my short sale closed. If more banks become like-minded, short sales will remain attractive and things will keep moving. It’s a patchwork out there, though. Some banks are great, while others seem to be trying to lose money!

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Lately, however, I am watching many banks reject offers outright (even at amounts that they had previously accepted on the same property). With no opportunity to respond, the buyer is left either randomly increasing their offer in hopes that the bank will accept or simply walking away. Most buyers opt for the latter.

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Buying a home that has been foreclosed can be a very good deal, particularly if you have money to invest in fixing it up. You generally end up with more in equity than the amount you spend fixing the property, particularly when you do some of the work yourself…. Even if you’re a first time homebuyer with no money for cosmetic or other repairs, a foreclosure may be within your reach with creative financing that allows you to finance the repairs based on the repaired value of the home.

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Short sales typically are accepted at 85% to 90% of market value and when you’re buying a big ticket item like a house, that’s a lot of savings.

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