Often times at Jamason & Associates, we hear from buyers “I only want to see short sales and foreclosure homes”. We understand – hey – everyone wants a deal and to save money right? Of course, and we don’t blame you! But before you decide as a buyer to tell your Realtor this, consider a few things before making your decision and filtering all “non” distress sales out of your search.
Did you know that according to research only 20% to 30% of short sales ever actually get to the closing table? The number is higher for foreclosure properties but not by a ton! Did you also know that many short sales and foreclosures these days are priced at market value or slightly below, and so regular sellers (as well as new construction builders) are having to compete, and pricing their homes at equally affordable prices (with fewer hassles?)
A few more facts to consider when choosing your next home.
- Can be a great deal and are generally priced to sell – fast. You may be competing with investors when offers are being submitted.
- Can generally close in 30 days or less.
- You will usually know if your offer is accepted by the bank within 1 to 5 days.
- May have deferred maintenance issues and need significant repairs (remember the movie “The Money Pit” from the 80’s with Tom Hanks and Shelley Long?!)
- Generally cannot close in 30 days unless they are already deemed “bank approved short sales”. Even then, sometimes there are delays.
- You must wait 1 to 9 months (sometimes longer – I had one that took a year!) to hear from the Seller’s lender as to whether your offer has been approved or not. You must learn the art of patience if you are going to wait on a short sale to be approved. It is not, by any means, a fast process.
- The bank has not determined the sales price, the listing Realtor has, and it may not be accepted by the bank until Seller’s hardship is determined and a Broker Price Opinion (like an informal appraisal) has been obtained by the bank.
- May have deferred maintenance issues and need significant repairs (again – the Money Pit!)
- Are competing with short sales and foreclosures and may be priced equally low (or your Realtor can use comparable sales to support a competitive offer!)
- Can generally close quickly if Seller is able.
- May involve fewer appraisal hassles and delays if Seller has prepared on their end.
- Seller will disclose facts that materially affect the value of the property (not the case with foreclosures). May have less deferred maintenance.
- If inventory, can close immediately.
- The builder may pay your closing costs or buy down your interest rate, and is competing with the foreclosures too, so prices are good!
- Generally has a 10 year structural warranty, and new everything – no deferred maintenance or repairs!
So before you decide that foreclosures and short sales are the steal of the century – take a look at all your options and consult your Realtor about what’s best for you and your family, and the time frame for moving into your next home.