Buying a Short Sale

Buying a Short Sale is a great opportunity to buy a home that is under market value, but it requires a great deal of patience and an experienced realtor to guide you through the process. 

 

Short Sales make up a significant amount of the inventory in today’s market and hold substantial opportunities for Buyer’s to purchase a home for below market value! But it is important, as in all real estate transactions, to work with a well qualified Agent when buying a Short Sale.  You’ll want to find a certified real estate professional with comprehensive training and experience and a specific understanding of the complex issues confronting the real estate industry today.  Find out how Tri County Residential Group can be an invaluable resource to you in making a Short Sale your affordable home buying option. Click here. 

 

Anyone considering buying any distressed property should heed the classic warning: Caveat emptor, let the Buyer beware.

 

In buying a distressed property in Rancho Cucamonga, Chino Hills, Ontario, Pomona, Upland, Fontana, Rialto, Riverside, Corona, Mira Loma and other surrounding Southern California Inland Empire communities you have several options. You can buy it as a pre-foreclosure (Short Sale), at a public auction (Trustee Sale) or as a bank owned property that has been foreclosed upon (REO).

Short Sales account for nearly 47 percent of all home sales according to the Realtors’ association.  Below is a more detailed description of the potential risks and benefits of buying a pre-foreclosure transaction known as a Short Sale, where the bank agrees to accept less on a home than is owed on the mortgage.

There is one big benefit to Buying a Short Sale – you’re typically going to get a property below current market value potentially getting a great deal. Unfortunately, you don’t get something for nothing. There are also drawbacks.

However, Short Sales tend to be more problematic than REOs.

  • If you make an offer on an REO you can expect to get a response within a few days. The wait time when submitting an offer on a Short Sale could stretch from weeks to even MONTHS to get a reply.  
  • Because of the aggressive pricing on these properties, it is not commonplace for well-priced Short Sales to sell for the full list price OR MORE due to a bidding war between Buyers.
  • Banks want to avoid liability and will often require that Buyers submit offers with an AS-IS Addendum where the buyer agrees to assume any risk associated with the condition of the property. However, Buyers have the right to inspect the property, but something is missed, the Buyer, not seller, is responsible. This is one of the reasons these properties are discounted – to factor in the buyer’s risk.

There are other potential problems as well. While the seller may be motivated, the bank has to be convinced of two things:

  1. That the homeowner in question deserves an approved Short Sale
  2. That the Offer is close to market value, even though it is below the mortgage amount

If the homeowner has more than one loan on the property, this could complicate matters even further. Adding to the number of parties involved in the negotiations lengthens the time to close the deal.