Nov. 14, 2008 - Are Short Sales a Bargain?

Earlier today I sifted through 28 short sales closed within the last 6 months and 100 Bank Owned Properties closed within the last six months.

By and large they are selling pretty close to asking prices, with those prices dropping in small intervals and frequently while the home is on market.  The better and newer houses tended to sell short, while the older ones ended up in foreclosure and selling as bank owned properties.

The better values in many cases were the properties that were selling short of the original purchase financing, vs. those that were selling short of inflated appraised values at time of refinance after purchase.  Those based off true market value, purchase price, were selling close to 2008 assessed values.  Many were selling over asking price.

Simply being a bank owned property or a short sale did not relieve the buyer of determining current fair market value (which is pretty much at October 2005 levels per my previous post. 

For more info on short sales, see:

Should you buy a short sale property?

Why do Banks take so long to approve a short sale?

Q & A's from a Short Sale Class

http://www.raincityguide.com/2008/10/24/is-a-short-sale-a-bargain/

http://www.raincityguide.com/2008/11/09/short-sales-another-buyer-beware-aspect/

http://www.raincityguide.com/2008/10/25/options-for-homeowners-facing-foreclosure/

Distressed Propert Law WA

Nov. 20, 2008 - RE: Are Short Sales a Bargain?

They should be!

If they're not, most likely:

1.  The buyers committed too many months into the deal and did not have the heart to back out

2.  The deal had little to do with a good bargain but more to do with getting an approval.  Emotional focus was on the wrong part of the deal.

3.  The listing agent had no idea they were being coerced into an unreasonable purchase price by their LMDs

4.  The listing agent did nothing about the BPO

Nov. 20, 2008 - RE: Are Short Sales a Bargain?

One more thing:

Listing on the MLS & negotiating isn't the only way to deal with a short sale.  Sometimes you need to wholesale a property, which basically entails having an investor send an offer, obtaining short sale approval for a reasonable discount, THEN listing it on the MLS and assigning the contract. 

Nov. 23, 2008 - RE: Are Short Sales a Bargain?

Not always.  I am working with a client who has had an offer in on a SS for almost 45 days.  Still no action from the lender:(

Nov. 23, 2008 - RE: Are Short Sales a Bargain?

Jonathan,

If you start out with the correct expectation, you won't be disappointed.  The norm for a response is 90 days, and you usually close within 10 days of response.

No one should make an offer on a short sale without setting 90 days as the expectation.  Be ready to close within 10 days whether it is an early or late response.

If there was someone in escrow before you, the response may come more quickly.

Click on the link in the post "Should I buy a Short Sale?"  for a fairly complete description of the entire process from the standpoint of a buyer.

Nov. 25, 2008 - RE: Are Short Sales a Bargain?

You're right about the 90 day expectation.  I advised my client that it would be best to submit the offer and then keep looking until we hear back.  That way if we find a better home for the money all we have to do is rescend the offer.