Regardless of a few, for whatever reason, negative posts here. All short sales are not money pits. There are some, no many, forclosures that are just that.. bad money pits due to the homeowners mostly abandoning thier properties and not caring and the bank not maintainingthe properties.
Short sales are a different animal, these are properties that most of the time the owners are still living in their homes and trying to sell and get out of their current situation. Are someof these in bad shape.. yes. But most short sales I have been in have been maintained. I recently sold one that had a brand new $25,000 kitchen, new baths and a whle tin of upgrades.. including a 6k viking stove, bosch appliances and granite. Sold at a VERY,VERY good price. 100k under market.
A lot of agents are not educted in the process of listing or selling short sales, that is the main reason for hesitation when you ask an agent to see short sale or forclosed properties. This is the reason why you need an agent that is educated in short sales and foreclosures.
Make sure you get a CMA from any realtor on the properties in the area.. yes, get one for the past year.. then ask for the previous year sales and the year before that... get a good understanding off the market.. the highs and the lows. This way you will have an idea of the complete area of home sales and you should be able to get a good bead on what is happening.
Ask whomever you work with about their short sale knowledge and how many they have listed and closed. Unfortunately for you, I am not in your area to help you out.
So, my recommendation is "yes", proceed if you are ready and consider opportunities that fall comfortably within your means. The banks are much more conservative themselves so there is less likelihood that you will be encouraged to do something that overleverages you. But do be careful, buy below your means and don't overleverage yourself. This will give you a buffer that should help you sleep at night.
A short sale is a property that whose market value is below what is owed to the bank. Evaluate opportunities with an eye towards avoiding this possibility for yourself.
Good luck to you!
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In this case, the recommendations of self-serving realtors happen to be in line with reality. Short sales and REOs have driven down prices, and interest rates cannot stay this low for much longer. Once the economy really gets rolling again, and inflation becomes a looming threat, the Fed will reverse course and mortgage interest rates will start going up. So, for that matter, will home prices. I think that could happen as early as this Summer. Combine that with the homebuyers credit and now is probably a good time to move forward.
Keep in mind though: That does not mean you should buy a short sale or foreclosure. These homes are sometimes a good deal, but most of the time they are not. They are usually poorly maintained and need cash put into them after you close. Also, you can go into contract on a short sale, wait for 4 months for all the ducks to line up, then have the bank sell to a higher bidder or decide to foreclose after all and the house winds up in a sheriff's sale and you wind up having wasted a lot of time and effort. And if in the mean time interest rates go up? Double whammy!
I would advise you to move forward, but buy a normal house from a normal seller who has properly maintained the property and is actually able to sign the contract and convey title.
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If you have some homes in Egg Harbor, other areas of Atlantic County, or southern Ocean County (Little Egg Harbor, Tuckerton, Manahawkin, Barnegat or Waretown, give me a call!
Good luck, it's a big decision but I don't think you'll regret it!
Keller Williams Realty - Atlantic Shore
Yes, it is unfortunate that many people are facing these tough situtions. But, these situations create opportunity for people that have been waiting for the right moment to take their "leap of faith" and aquire the home that they have been waiting for. Due diligence is the key to any transaction and it sounds to me that you have been planning for this moment. If you have all your ducks in line and find the right property now is the time to buy. You have to do what is best for your situation and if that means the opportunity is in a short sale, then you would also be helping someone out that is in trouble. You sjould look at a short sale in a positive way from your standpoint.
Now is the best time to buy. Of course there is the $8,000 incentive for first time home buyers. There is also a $20,000 grant for down payment and closing costs in Atlantic County and lots of inventory. Another great reason to buy now is that interest rates are at historic lows. And rates will be going up. So for every percent that rates go up that is a 10% decrease in the price of the home that you can afford.
Please contact me. I would like to meet with you and further educate you on the opportunities in the market and answer any questions you may have. Please contact me at 609-338-3773.
Your due diligence is good. And you should be concerned but make sure you are informed so not to miss out on a home you really like because you are afraid of distressed sellers bringing down values. They really are temporary stress factors on the market. Look at what has happened with values in the last 6 months especially. Have your agent explain the report to you. .
Just because a short sale is selling at a lower price does not necessarily reflect the total market of an area. It certainly puts stress in that market but ultimately after they have all sold the market becomes more realistic. Short Sales and REO's only stress a market, it is the panic selling that really affects conditions. As soon as those distressed properties are gone, you'll see a more relevant market. Consider short sales mostly approx 10-15% below market. This is an average of course but a good price point to begin.
I would be more concerned with REO's in an area than Short Sales. Short Sales are merely an assistance to homeowners and banks who need to sell a home without the foreclosure process. At least these homes are mostly in avg to good condition because they are lived in. REO's are vacant and taken care of.
Good luck and make sure you get a good picture of what you are buying, not just look at short sales. Get a market absorption analysis.