Monday, January 3, 2011

Buying a Short Sale for you? (Part 3)

In our Multiple Listing Service, you will
know it is a "Short Sale".  You will
see this disclosure.
The term "short sale" or "bank owned" on a property certainly generates a lot of buyer interest.   So buyers must believe that the short sale is a deal...  but is it?

If you have the Time and Patience, and the right players involved..   then, it may be.

We know that someone offering a "short sale" is attempting to avoid foreclosure.
We also know that the lender accepting a short sale is attempting to minimize their loss.
We also know that a good Realtor will price their listing ahead of the market, because they know that it is going to take time and a buyer may have to wait a long time for this property.  

So,   Is it for you?   Here are some things to consider...

  • The Seller/Realtor priced the property aggressively but also knowing that the bank may not accept the price....the agreed upon offer price will have to be supported by BPO's (brokers price opinion) or appraisals.. in other words validated by others not involved in the transaction.
  • There is a possibility that the bank will say no...  alot of time could be wasted waiting for the banks response....    no problem you say    ... but experience tells me that come month two with no word, a buyer will start to worry about interest rates and missed opportunities...
  • If there is a second lender on this property (very likely)..this second lien holder has less motivation to agree to remove their lien...
  • This process really can't begin until the seller accepts an offer on the property....   it can and will take months....    again, just because the seller accepts the offer doesn't mean bank(s) will.  
  • Who is negotiating the "short sale"...  is it someone experienced?    Is the Sellers paperwork in order... Do they have a bonafide hardship? 
If you can deal with the unknown and the possibility of not having it happen.. then you may make out okay and get a "deal".     You will also need to understand the Banks position here.   Their attachment to the home is strictly financial...They will do their due dilligence and research  market value....   
Are they really going to sell this out substantially lower than the market will bear at this point in time?   
If you need to find something more immediate or are worried about interest rate changes effecting your payment, then you might want to skip looking at these types of listings.  

In my market, the "short sale" is disclosed in the listing.

If you do decide to go the "short sale" route...   get your inspections done and financing in order early in the process....

You don't want to go all this time waiting to find out that it is not the home for you after all....

2 comments:

  1. There sure is a lot to consider when buying a house especially one marked "Short Sale".

    ReplyDelete
  2. Great information, Carol-Ann!

    ReplyDelete