The Shorter Short Sale
Want to save time on a short-sale purchase? Be the second bidder.
THE LAST THING Mel and Mark Janecka wanted was to get tied up in a short-sale time suck. After selling their Mill Creek home within three weeks of putting it on the market in April, the couple had to scramble to find a new place. They’d barely begun to scan the listings, and the stress of a distressed-property purchase was more than they could stomach. “We were desperate,” Mel says. “Our house was going to close in four weeks, and we had no idea where we were going to live.”
Well, they did know they wanted to live in the Phinney-Greenwood area. But the only casa they could find in their price range—a two-bedroom studs-out remodel just blocks from Green Lake—was, wait for it, a short sale. “We were like, ‘Really? Crap,’ ” Mel says. They were ready to walk and had resigned themselves to shacking up in an apartment for a few months when the listing agent slipped them a tip: Another couple, exhausted after waiting four months for an anonymous accountant at Chase to consider their offer, had just bailed as the bank was about to seal the deal. If the Janeckas could do a smidge better than the original buyers’ price, they might be able to slide in behind them.
Two years after the bubble burst, a typical short sale can still take three to six months to close as the lien holder ponders the property’s market value. But some savvy Seattle shoppers are navigating the bean-counter bureaucracy in less than 30 days by making offers on homes already under contract and praying the first deal dies. Not every bank will go for it, but, in effect, the backup bidders cash in after the primary buyers—who negotiate with the sellers and slog through the bank’s lengthy appraisal process—do all the work.
“When we went to our lender, he said, ‘You think you’re going to close a short sale in four weeks?’ ”
As John L. Scott broker Kirk Russell points out, though, “knowing the details of the first offer could be a key factor in deciding to make a backup offer.” In particular, successfully swiping a failed short sale hinges on timing. Get in too early, and you’ll be waiting almost as long as the original buyers. Swoop in too long afterward, and the bank may want to start from scratch. In fact, some listing agents advertise homes that have gone through the appraisal process as “pre-approved short sales,” but that’s far from official. “Let’s say three months go by before they get another offer,” says Windermere broker Richard Eastern. “The bank’s going to want to do a whole new value.”
The Janeckas hit the buyers-in-waiting window perfectly. Chase had just kicked the original offer back, demanding $5,000 more than the first buyers’ bid. Mel and Mark were more than happy to oblige, and they moved in a month later—just as they were closing the sale of their Mill Creek home. “When we went to our lender, he said, ‘You think you’re going to close a short sale in four weeks?’ ” Mel says. “He thought we were crazy.” Maybe, but then what part of this market isn’t a little insane?