Should You Buy A Short Sale?

December 26, 2010 By Leave a Comment

Short sales now make up 20% of the homes for sale in the Twin Cities, an increase in recent months because short sale inventory remains near all-time highs and the number of “traditional seller” homes are the market has begun its seasonal decrease.  This means that no matter where you are searching and what you are searching for, you are very likely to come across several homes for sale that are short sales.  So the question is: should you buy a short sale home?

I have discussed short sales many times (1, 2, 3, 4, 5, 6, 7) and we’ve all heard by now that a short sale offer can take 2-6 months to be accepted, rejected or countered by the seller’s bank(s).  For many buyers, the unsure and lengthy nature of short sales makes them unacceptable options.  Some buyers think that it won’t be that bad, only to go nuts with the waiting game where there is often little or no apparent movement in the process.  Still, for some people a short sale may be a good option to consider – so long as you have the time to play the waiting game and understand that even after waiting you may not get the home.

Star Tribune reporter Maria Elena Baca wrote a story about her own experience buying a short sale.  It is a pretty good overview of what typically happens in a short sale except this one moved a little quicker than the average sale – just about 90 days from offer to closing.

What I find particular of note in this story was that the highest offer was not the one the seller accepted – the reporter says she believes her offer was accepted over a higher one because “…it helped that we were a family, and that we had the flexibility of living with my parents, if we must.”  In short sales, typically only one offer is accepted by the seller and forwarded to the seller’s banks for approval and the seller (not the bank) chooses which offer they accept and submit.

This is one of the biggest reasons that banks lose more money on short sales than they need to: if they were quick to respond to offers, as they are with their bank owned (REO) homes, more buyers would make offers and the accepted offer would likely be the best price, since there wouldn’t be nearly the concern of a buyer becoming impatient and walking away like there is today.

Filed Under: Community Issues, Foreclosures and Short Sales, Info for Buyers, Opinion, Personal Experiences, Short Sales Tagged With: ,

Are Higher-End Twin Cities Foreclosures Coming?

September 27, 2010 By 2 Comments

For a while now there’s been some talk that the foreclosure activity would become more prevalent in the higher-priced home market – well as of yet we haven’t seen that materialize.  In fact, by far the strongest activity remains in the lowest price ranges for both foreclosures and short sales:

In the future we may see an influx of foreclosures at higher price points but for right now our local MLS is showing the foreclosure activity is still more heavily found in the lower price points.

Filed Under: Community Issues, Crystal Ball Projections, Foreclosures and Short Sales, Info for Buyers, Info for Sellers, Market Stats, Neighborhood Info Tagged With: , ,

How Much ‘Shadow Inventory’ Is There?

June 29, 2010 By 10 Comments

The National Association of REALTORS has put together a video discussing the amount and type of  ’Shadow Inventory’ nationally.  The biggest problem with such figures is that they are still based off of sampling & definitions of what is or is not counted in the definition.  Regardless of what the actual number is, the video discusses how banks are putting more focus on short sales than they have in the past – which I believe to be a much better option than letting these properties go through the entire foreclosure process.

Also of note is the reiteration that banks are not going to just dump huge amounts of new inventory on the market – they understand that this is not in their interest and to be honest, they can’t process this stuff fast enough to dump a huge number of new foreclosures on the market – the foreclosure process is a long one and each can take a little different timeline so by their very nature they are likely to come on in a staggerd fashion.

I still do not subscribe to the idea that there will be some huge “wave” of foreclosures coming, but rather that we will continue to see the high levels of activity that we have seen since 2008.

Filed Under: Foreclosures and Short Sales, Info for Buyers, Info for Sellers, Market Stats, Opinion, Short Sales Tagged With: , , , ,

Twin Cities Short Sales Help

May 10, 2010 By 3 Comments

No matter what happens with the economy, interest rates and house prices, the next few years we will continue to see both foreclosures and short sales.  From an owner’s perspective, a short sale will often do less damage to their credit than a foreclosure – though in many cases the damage can be almost equal. There is a lot of work that goes into a short sale and lots to watch out for.

If you or someone you know is considering your options, my coworkers and I can help explain the process, direct you to additional resources if you need more information, and walk you through the entire short sale process.  The real estate commission that is charged for selling a home is included in the amount that the bank accepts in a short sale, so there is no out of pocket expense to the seller.  In both foreclosure and short sales situations, the most important thing you can do is seek help early in the process.  As time goes on, your options become more limited.

For questions and assistance with short sales, call 1-800-941-0959.

There are many agents that claim to be shortsale experts but do not have the experience and training to back up that claim.  The first thing that an expert will tell you is that while every lender and every situation is different, the core process and requirements are the same every time.  As a homeowner pursuing a short sale you need to be willing to put in the effort to provide all the documentation and dialog that your lender(s) require.  You also need to be aware that the whole process can three, six, or even nine months to go through and that the lender does not approve all requests.  When/if the bank does approve the short sale, it is also very important that you know the full terms of the approval – in some cases the lender will release the home as collateral on the loan but will still expect you to pay the defficiency off. This is yet another reason why the agent you choose to assist you must be competent to answer these questions and others.

Ready to begin the short sale process?  Call 1-800-941-0959

Filed Under: Foreclosures and Short Sales, Info for Sellers Tagged With: , , ,
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