With so many of the homes on the market today being short sales, they are something every buyer needs to consider. Before you jump in with both feet, though, there are some things to think about!
- This is not your normal transaction. No matter what terms you and the seller agree to, the lien holders may not agree, and you are back to square one. The lien holders may make seemingly arbitrary decisions or requirements. That is the name of the game!
- You will not get a great “deal” with a short sale. Yes, the price may be discounted some, and that may not be worth the wait. The will banks have an appraisal or valuation of the property….we all have access to the same information, so value isn’t a secret. You will see short sale listings priced below market value in some cases. This is to encourage buyers to write an offer so something can be submitted to the lien holders to get the ball rolling. It doesn’t mean that the lien holders will accept the price you offer, and they often do not. You can expect to pay close to market value for a short sale in most cases.
- Short sales do require experienced agents on both sides of the transaction…it is not time to work with a novice! Especially the listing agent should be experienced with short sales or you may waste months of time.
- If you do not have extra money for repairs, do not make offers on short sales. In most cases, they are sold in As-Is condition and neither the sellers nor the lien holders will make any repairs. There may be exceptions, but don’t go into a transaction expecting it. If you are purchasing with FHA or VA financing, the property needs to be in good condition.
- Short sales take a long time! The fastest closing I have seen is about 45 days, many take several months…up to a year or more. In our area, 90 to 120 days is normal. So, if you need to be moved in a certain time frame, short sales may not be for you.
- Remember that even though the short sale process has, in many cases, improved, not all short sales will be approved. Some will never close escrow and will go into foreclosure.
KCM posted a great article about short sales, you can read here.