I can speak from my experience as a first time buyer who bought a short sale. You may get a better price, but remember you may also have lots of repairs to deal with. In my case the previous owners were still living here, but they did not keep up with maintenance for a long time before I got in. They also did not disclose known issues. I had an inspection, but the inspector missed lots. The stuff he found I was willing to deal with it. Unfortunately the stuff he did not (all entrance doors hung incorrectly allowing rain to enter, furnace needed new parts, chimney needed to be rebuilt, cluster fly infestation, a wall of mold, etc.) have quickly added up. Even the vinyl fence that my agent assured me I would never have to touch has been coming apart with every strong wind we get. So if you consider a short sale make sure you have plenty of money put aside for all the unknown issues. It's a frustrating process and you may not get what you had hoped for.
For a complete list of tips and advice on short sales, please see my blog below.
As far as a foreclosure, you will not want to buy at auction, you should buy a home where the bank has taken it back, cleaned it up, cleaned the title and is now offering for sale below market value. Having a buyer broker experienced in bank owned homes sure does help.
For a complete list of tips and advice on buying a bank owned home, please see my other blog below.
Once again, thank you,
A short sale can be a great price, but they are difficult. The first time buyers I worked with almost gave up their dream because of problems and being Out Bid by All Cash investors twice during our time working together. Finally we did find a property for them, but they were pretty tired by the time we did.
So my answer is...it depends upon you. Can you wait 6 months or longer to get a home? Can you handle the disappointments and frustrations of going after this type of property?
To sum up, a short sale brings some additional complications to the process but has potential benefits also. The home still needs to be evaluated on its own, and you need to factor these potential complications and benefits into your decision of whether to buy or not. Purchasing a short sale has less to do with whether you are a first time home buyer or not and more to do with your individual needs and preferences. Above all though, especially in a short sale, you should find an experienced Realtor you trust to assist you, and preferably they should have extensive short sale experience.
On the other hand, most homes that can be purchased as a regular arm's-length transaction will tend to be in decent condition. There is a seller to negotiate inspection items with as well. I always advise my buyers of the pro's and con's of purchasing a short sale. These properties can be great deals if a buyer is willing to wait longer for the approval, and if the property is in good enough condition to appraise.
It really doesn't make a difference so far as price or terms. Some lenders on short sales can be difficult to work with and the process can be very drawn out. A foreclosure or traditional sale will go faster and more smoothly. If you are looking in the City of La Mesa, where I was raised, they have a special program that can help first time buyers with down payment and closing costs. Not all lenders participate in this program but I work with one who does.
When I worked at the San Diego Housing Commission, I helped develop plans for first time homebuyers and would like to help you with your first purchase. This site is a good way to look for homes in the San Diego area http://www.yoursdps.info
Jerry Heard - Broker
CA DRE #00648687
Good luck to you---I'm happy to help you answer any other questions.
By the way, you should include foreclosed properties in your search too! Contrary to what you may hear in the media, good deals can be found on homes in excellent condition. I would recommend you keep the search wide open in the beginning to make sure you see everything available.
La Mesa is a great place to buy your first home. I should know...having bought mine there 11 years ago and I"m still a resident.
One last thing...the siingle most important step for a first time buyer is talking to a lender. I have two here in La Mesa that I know and trust. Let me know if you would like their contact info.
Short sales can be emotionally taxing if you let them, and you may need to come up with extra money in escrow if your lender requires something to be fixed, or the seller's lender requires something be paid to make the sale work, and the seller won't (can't) pay it, or the bank refuses to. They're complicated processes, and things may come up that need to be paid to make the sale work for the seller's lender.
Other than this, you'll end up buying what you can afford, whether it be a short sale, foreclosure or regular sale. It will mainly depend on your budget, and your loan type can also determine which property you'll end up buying.
If you have any other questions at all, just let me know. I work with first time buyers all the time.
The problem for the stereotypical "first time buyer" purchasing a short sale or bank owned home is that there are so many issues you may have to confront for the first time beyond just buying a home. Sellers may not do proper disclosure on a short sale and banks don't do any at all. Inspectors may not find all the issues with a house and if they do, neither short sellers or lenders want to do any repairs.
Time frames on both purchases are very ambiguous and uncertain. You'll need to have patience and the finances to move quickly yet keep your current home available past scheduled closing in case something goes wrong.
You may not be a stereotypical first time buyer, so you may be a candidate, but learn all about the process if you proceed so you can minimize the surprises.
One other way to improve your experience is us an agent who is current and responsive regarding short sales and/or bank owned. You need experience on your team.
Happy funding, Rudi
Let me know if I can help you in any way!
Joan Wilson (Realtor, SRES, Ecobroker, Certified REO and Short Sale/HAFA Specialist)
California Cool 4 Sale
Prudential California Realty
Direct Phone: 760-757-3468
License # 01341483
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