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Reasons to Buy a Short Sale

March 11, 2010

As REO sales wane and Short Sale properties are becoming more the norm, then Buyers need to be aware of how offers are looked at by the owner as well as the client.  It has been my experience that home sellers just want to get out and will take most anything.  However, the bank does not think that way.  Although the homeowner makes the first decision, the beneficiary also has a say in what price ultimately they would consider.  After all, they have to adjust their net worth by the amount they do not collect. So, it makes sense, that the lending beneficiary wants the most out of the property that they can get.  The listing agent usually has to supply market comparables to the bank and/or the bank may order a broker price opinion or an appraisal to verify values.

 First, short sales have traditionally sold for less than REO and/or traditional sales. This does not make sense to me as a short sale is often in better condition.  In order to get the most comparable data, the buyer should have their agent take a look at what has sold and what is available on the market.  Recently we provided a price opinion on a property and the sales, mostly REO, were higher than those listed, mostly short sales.  There was about a $60000 difference, or 22.5% of the sales value as a discount.  So, the bank also has this same data and should be asking for market price but this may not happen.

 Secondly, the buyer is usually getting a fairly well maintained property as opposed to an REO which often as a higher ratio of deferred maintenance.

Finally, patience is rewarded.  Recently, short sales are closing faster than previously.  I recently heard about one that closed in two months.  Most banks are attempting to make that 60 day deadline.  In our market as noted previously, the majority of pending sales are short to the bank. 

 So, join the crowd, go ahead and make an offer on a short sale as this is the market that is becoming the more “normal” transaction type compared to a regular Seller with equity and REO.

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