There is a lot of misinformation out there about short sales. I’m here to clear the air.
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Whenever I hear multiple buyers starting to repeat the same misinformation, I start to notice a trend coming about. I never know where the info is coming from, but I know it’s wrong. Today I want to clear the air a bit on a few things I’ve been hearing about short sales.
Oftentimes, buyers tend to think that short sales are the best strategy to get a deal when buying. 85% of the time, that’s not true. Short sales are unique and different from other sales for a few reasons, such as:
1. In a traditional sale, homes that sit on the market and don’t sell typically reduce their prices. For short sales, this doesn’t typically happen because the balance the owner owes continues to rise as long as the short sale goes on. If someone is in foreclosure, they are not making payments. This causes interest and penalties to continue to accrue.
2. Most of the time, the loans on these homes have mortgage insurance protecting the bank from losing too much money. This doesn’t give them a lot of motivation to drop their price significantly. You’ll be paying at, or just below market value for a home that may be in major disrepair. It might not even have a clean title, which will cause you to have to pay off any liens on the title. Ultimately, the bank could just decide to foreclose on the property at any time as well.
Before you hang your hat on the short sale bargain dream, remember they can take up to 13 or 14 months, and make sure you’re educated on what the process is like and an individual home’s situation.
If you have any questions for us, don’t hesitate to give us a call or send us an email. We look forward to hearing from you soon.