December 11, 2015 8:58 pm
While short sales were a very popular means of selling a home within the past few years, they’re in much less supply today as the housing market continues to recover. In fact, banks are more reluctant to grant a short sale unless there is some form of financial hardship that’s causing an inability to afford the mortgage payment.
Another reason for the drop in short sales is that lenders are finding that as home prices rise, more often than not, they can get a better outcome through foreclosure auctions or REO sales, which are often quicker than short sales.
While the number of short sales has fallen significantly over the last few years as rising home values have forced far fewer distressed homeowners to sell, short sales remain plentiful in some areas of the country, and you can still find some serious bargains.
Once a bank receives a short sale request from a homeowner, the bank performs a BPO (Broker Price Opinion), which is simply an opinion of what the house is worth from a local real estate broker. The bank uses this BPO when determining the short sale amount.
But that doesn’t mean you shouldn’t be bargaining. In fact, the whole idea of going for a short sale is to find a home for less than market value. However, when making an offer, be sure you don’t lowball too much.
If you’re interested in pursuing a short sale, your agent should check recent home sales in the area to get a better idea of the properties that are selling and work with you to come up with an appropriate price that’ll be more likely to be approved by the bank.
When you make an offer on a short sale, federally regulated lenders must respond within 30 days and deliver a final decision within 60 days. However, that deadline has loopholes, as the lender can ask the seller for more paperwork and then delay the decision while waiting for that paperwork to arrive.
One important thing to keep in mind is that with a short sale, there is no leniency with the closing escrow date and a buyer must close on time. Because of this, it’s important to take care of all loan paperwork immediately after opening escrow.
Also, be warned that when buying a home that’s listed as a short sale, chances are that there might be some issues that need to be addressed as the previous owners most likely didn’t spend the money or take the time to fix things that other sellers most often do.
To learn more about short sales, contact our office today.
Published with permission from RISMedia.