Are Short Sales Worth the Effort for Buyers?

Making sense of the story

• Typically with a short sale,
  the homeowner is underwater and has experienced a financial hardship such
  as a job loss.  To limit the damage to his credit rating, a homeowner
  may attempt to work with his lender to negotiate a short sale.  Not
  only must the bank approve of the short sale itself, it also must agree to
  the price, since the bank will accept the difference as a loss.
• Unlike foreclosures, in
  which the owner has walked away and the bank is looking to unload a vacant
  – and sometimes vandalized – property, a short sale isn’t a distressed
  home that will sell at an extremely low price.  According to data
  from RealtyTrac, short sales typically sold for nearly 10 percent less
  than the market price in the first quarter of 2011, whereas foreclosures
  sold at an average discount of 35 percent.
• Home buyers wanting to
  purchase a short sale must have patience.  In most cases, when a
  buyer makes an offer on a house, he receives a response from the seller
  within a few days, or even hours.  With a short sale, the bank must
  approve of the sale and bank representatives are overloaded with
  cases.  It may take 30 days or longer for a buyer to receive a
  response from the bank.
• In a traditional real estate
  transaction, it is common for a home buyer who currently owns his home to
  make his offer contingent on selling his current home.  In short
  sales, most banks will not approve an offer that is contingent on the
  buyer selling his current home, as too many things can go wrong.
• Banks also typically won’t consider short-sale
  offers that have inspection contingencies in them, so buyers can either do
  an inspection prior to making an offer or forego an inspection altogether.
• Even with the challenges associated with short
  sales, buyers should not avoid these transactions.  Being prepared
  ahead of the time and working with an experienced REALTOR® can help buyers
  avoid frustration and surprises down the line.

Reprinted from C.A.R. Market Matters

Thank you for reading this post. If I can ever be of help in finding you the perfect property here in the Napa Valley, please email me at Curtis@NapaValleyAddress.com.

Your Broker Extraordinaire, selling Napa Valley Real Estate from its heart, Yountville