Is a “short sale” worth my time and effort?by Tim Manni
Short sales differ from most home purchases in almost every way. At every step, from shopping to negotiating to mortgage financing, short sale properties are just harder to deal with. Here’s what you need to know.
What is a “short sale?”
A “short sale” indicates that the sales price of the property is less than the amount the former homeowner owed against it. With so many American homes underwater, it’s a common sight in real estate listings these days. But a short sale does not mean a screaming deal for the homebuyer — at least, not necessarily. Just because the mortgage lender is probably taking a loss doesn’t mean that the property is priced way below market value.
So what kind of deal, if any, are we talking about?
“People want to get houses for half price, and that’s not going to happen,” says Tina Uchytil, a Nevada-based REALTOR.
In general, short sales do offer some discount from the market value of the property — anywhere between 5 percent to just over 30 percent, according to RealtyTrac’s first-quarter 2010 figures. If short sales didn’t come with some discount, there would be no reason for buyers to deal with the myriad headaches that these transactions can present. Make no mistake, short sales come with headaches, so you need to know what to expect.
What tips can you give me?
Here are some tips to keep your short-sale-purchase headaches to a minimum:
- Find a pro who is familiar with short sales: Some multiple listing services (MLS) allow public access, and you can see if properties listed are short sale (also called pre-foreclosure) properties. You can browse these listings online on your own, but once you get serious, consult a reputable real estate agent with plenty of short sale experience. This professional can save you time and help you avoid costly rookie mistakes.
- Adjust your expectations: Don’t get your heart set on a specific property. Odds are you won’t get it. You’ll probably make several offers, and after that, it may take months to close once you have an accepted offer.
For a ton more information on buying a short sale, from additional tips to why short sales purchases are so much different to how to finance your short sale purchase, be sure to read “Short sales always a bargain?“