Buying a Short Sale
If you are an investor looking for instant equity or a buyer just looking for a home to call your own, buying a Short Sale can often be a great deal. A Short Sale allows the mortgage holder to minimize losses on a delinquent loan and take the loans off their books. They typically result in losses of 19% of the loan amount, compared with an average 30-60% for homes that are sold after foreclosure. The costs of foreclosures can include not only legal fees, but also taxes, insurance, homeowners association fees, and the expense of maintaining the home until the property is sold. More and more banks are realizing that a Short Sale may be their best option to maximizing their return. The discount that a lender is usually willing to approve means the buyer gets a very good deal.
In a Short Sale the seller doesn’t really care about the price offered by the buyer. At that point the Seller just wants to get out and get on with their life. The lender however will care about the price. A good agent will need to be able to convince the bank that the offered price is the best price that that particular home will be able to command in that market given all the circumstances. A lender probably won’t take a price that’s 20% under market but if you can show them a systematic 3-5% price reduction campaign over a period of time you can often arrive at a price that truly is 20% under market. Short Sales have a stigma and lenders know this. A lot of agents won’t even show these properties. The buyer’s willingness to hang out and wait to see if the transaction can be put together is definitely rewarded in a lower overall market price.
Another benefit to buying a Short Sale is that homeowners in most cases are still trying to maintain their homes. These homes generally do not look like your classic foreclosure with dead landscaping, holes punched in doors and appliances and light fixtures ripped from their walls . In a Short Sale the buyer also receives disclosures from the Seller about the property and its history. In a foreclosure the buyer will receive no such information. If you’re interested in purchasing a Short Sale or foreclosure click here for a list of distressed properties currently available.