With the rate of foreclosures down in most states, buyers still looking to scoop up a good deal are turning to short sales. But the reality is that short sales aren’t quite the steal people may think. The reason? Banks are looking to get the current market value, or as close to it as possible, before they agree to the short sale.
Here’s how it works: a homeowner can no longer afford their payments and is perhaps underwater on their mortgage (meaning they owe more than they can sell their home for). They work with a REALTOR® to list their house and work to sell it short (meaning for less than they owe). In the meantime, the Seller and REALTOR® or their Attorney engages with the bank. Once an offer comes in, that offer (or multiple offers) gets submitted to the bank.
The bank subsequently contacts a REALTOR®/Broker or an appraiser to determine a fair market value. And generally, that is the price they will demand. Often after waiting months for a short-sale approval, a bank will simply decline the short sale, or ask for an increase in price to get the fair market value. So basically—you are getting a home for current market value. BUT be assured the seller will be making no repairs. Remember, they can’t afford to pay for the home so they certainly can’t afford to make repairs.
Compare this to a home that is not in a distressed sale situation. The sellers REALTOR® would have done a comparative market analysis and worked with the seller to list their home at its current market value. That seller, more likely than not, has kept their home in good condition, and will be prepared to negotiate on both price and any repairs needed as found on a home inspection.
The reality is that in either case, you are most likely going to get a house at its current fair market value. However, a non short-sale property has a much shorter closing time, is likely in better condition, and the seller may even make repairs (although its not guaranteed). This compared to months of waiting for approval on a sale that may or may not happen, with a guarantee of no repairs. Doesn’t sound like such a great deal after all.
For more information about short sales, or if you are interested in buying or selling a home in the Outer Banks of North Carolina, please contact Coastal Outer Banks Realty at 252-489-2140 or go to our website at www.coastalouterbanks.com.