Posted: Saturday, November 5, 2011
By JOEL LANDAU Staff Writer Press of Atlantic City
GALLOWAY TOWNSHIP — Joe and Stephanie Tucci spent a year and a half looking for the right house.
And six months after submitting a bid, they’re still waiting and waiting and waiting to find out whether it will work out.
The township home that the couple bid on is a short sale, which means the owner of the house could no longer afford to pay its mortgage and is working out a deal with the lender to sell at a price lower than what the owner owes. When a potential buyer makes a deal with the seller, the lender’s approval is required for the sale to take place.
Local real estate agents say short sales are becoming a larger part of the local market and can often translate into a lower price for a buyer willing to be patient.
“People walk away from short sales because they get tired of waiting,” said Robert Shamberg, owner of Prudential Diversified Realty in Galloway Township. “Everyone wants a deal. Everyone knows short sales are a good deal. But they may not realize it takes a lot of time.”
The home could have several lenders that all need to be satisfied, Shamberg said. The bank could take longer than expected to give an answer or make a counteroffer, he said.
Shamberg counseled Joe and Stephanie Tucci through the process and said they could get a good deal if they were willing to wait. The couple placed a bid at $200,000, which Shamberg said is about $50,000 less than a realistic market value.
But sellers and banks are often willing to accept less rather than go through the long and costly foreclosure process.
That’s the hope of the Tuccis, who fell in love with the home that was recently renovated and features an open kitchen and cathedral ceilings. The couple placed the bid in April and hope to hear within the next few weeks.
“You can get a really good deal but you have to have time,”Stephanie Tucci said.
The couple has continued renting in Mays Landing and have looked at some other homes as a potential backup plan.
“It’s just a waiting game,” Joe Tucci said. “Hopefully they’ll take our bid or they’ll lose out and have a vacant property.”
Brenda Lawn, a real estate agent for Prudential Fox & Roach in Northfield, said short sales are an “absolute roller coaster”that can take an emotional toll on the buyers.
“The first thing I do is educate them. I tell them it’s a long process and there will be a certain degree of frustration,” she said. “It’s hard to do that. The buyers are so enthusiastic. But it really is difficult because it doesn’t always have a happy ending.”
Lawn said short sales and foreclosures have taken up as much of a third of the housing market in most of the region.
She said she’s had buyers wait between three months and a year for the bank to approve a deal, but Jeff Quintin, of Prudential Fox& Roach in Ocean City, said he has had some recently that took only a few months.
Conducting a short sale “is a skill providing you know how to manage the lenders and structure the deal properly,” he said. “If you know what you’re doing and get it structured the right way, a short sale can be like a typical sale.”
Quintin said larger banks may not open the file on the property until the bid is submitted, so it’s impossible to know what the bank would accept.
“In most cases there is not a predetermined (price) for the short sale unless you have already gone through the process,” he said.
But a short sale is often worth it to the bank considering it can take more than two years to foreclose on a property owner, Quintin said.
“You never know what a bank will approve,” he said.
Short sales also benefit the seller because they avoid foreclosure and leave the seller in a better position than if they waited to get more money on the sale, Quintin said.
“Their credit may go down 100 points but they can improve it faster than the market can improve itself,” he said, adding many sellers are finding it too difficult to redo their loans.
And the program has had its results.
Quintin said he recently had a home valued at $4 million approved for a $1.425 million short sale in Ocean City. Another Ocean City property valued at $2.765 million closed at $780,000, he said.
“The buyer is always getting a property under market value,” he said. “It’s worth it many times to go through it.”