I was just talking with a first time home buyer and when I asked her if she wanted to see short sales, she said "why not?"
There are several reasons "why not." but before I go into them, I want to make sure you understand what a short sale is. A short sale is when the owner of a house sells it for less than what they owe to the bank. The name is a little misleading. It's actually a long and complicated process; there's nothing short about it.
Then why is it called a short sale? Because the owner is trying to sell their house for 'short' of what they owe the bank.
This is very different from a REO, bank owned or foreclosure home where the owner of the house has already lost the home to the bank.
Related post: What is a Short Sale?
5 Reasons Not to Buy a Short Sale
Here's a list of the reasons not to buy a short sale:
- It can take excessively long (sometimes it can take several months) to hear if the bank will accept your offer after the seller has signed it. If you've got a deadline to be moved in to your new house a short sale will definitely not work.
- Even if you make a full price offer the bank may comeback and ask for more. That's because they will not tell us Reatlors how much to list the house for. They won't discuss pricing until offers come in. So Realtors don't know how to price them.
- The seller will probably not do any repairs. If they had extra cash sitting around to do repairs with, they probably wouldn't be doing a short sale to begin with.
- It will cost you more to close on the house. Closing costs that are typically paid for by the seller probably will not be paid for by the bank.
- Why waste time when interest rates are low and expected to rise in 2015? Even a small difference in interest rate can make a big difference in your monthly payment.
How About Foreclosures or Bank Owned Homes?
I have helped many people buy bank-owned homes over the last five years. They are still a good way to get a good deal on a home, but the ship has sailed in many parts of Albuquerque. In 2010, it was not unusual to get a foreclosure for 20% below market value. These days, the discount is not usually as deep.
by Albuquerque Real Estate Agent Rich Cederberg, eXp Realty, (505) 803-5012.