Please note that the banks are now tightening up the time it takes to respond with an answer and they are much more negotiable with price. They have too many short sales on their books to drag it out.
I've been helping First Time Buyers for 23 years as a mortgage professional and I will tell you what I have always told my clients here in New York: If you are a First Time Buyer, steer clear of foreclosures and short sales.
Foreclosures are someone else's headache. The home probably has not been well-maintained and you're a First Time Buyer adjusting to paying a mortgage. Do you really want to walk in the door to someone else's deferred maintenance that YOU will have to pay for? Also, if you're thinking there are deals to be had in terms of lower prices, mostly those "deals" go to professional investors who can pay cash, negotiate hard with a Lender, and close fast.
For Short Sales, my attitude of late is that First Time Buyers should steer clear. Short Sales tend to be a better deal for the homeowner than for the Buyer. You'll wait MONTHS for the homeowner's Lender to approve the short sale; maybe as long as Six or Seven Months. Meanwhile, you're stuck in a contract to buy that home. I closed a short sale recently with a Buyer who, after seven months said this at the closing table, "I don't even want this house anymore."
And he didn't even get the "deal" on price he thought he was getting! The house appraised for only slightly more than he paid for it at the short sale price. He walked into this deal thinking he was buying a home for $100,000 less than it's value. In the end that wasn't the case.
There are plenty of motivated Sellers with their homes listed on your local MLS. Go find a good Local Mortgage Banker, get prequalified, then find a great, experienced Realtor, and buy the home you want at the price you're willing to pay.
PowerHouse Solutions, Inc.
1010 Northern Blvd. Suite 234
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
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Often people think that a short sale is a deal
All things considered, I am not a big fan because of the many complications along the way.
Plus it is never a quick transaction.
There is a lot of inventory now so I would educate myself on today's value of the homes that you are looking for and just look for a straight forward deal if you can
Example, we have a listing at 469k, it is priced right and in great condition
Down the block is a very similar house at $439k. This one is a nightmare to show, there is no cooperation from the owner, there is a violation on the house, etc etc etc
This is just an example, but if you can avoid them, I think you can do just as good
I'm licensed in NY, but if you want a NJ referral for a good realtor to help you, just reply
Best of everything in your search
Pitfalls: Not all banks are that wonderful and some may not be as well organized to pull off a reasonably quick sale. They are indeed getting better as the laws change and they run the risk of having to foreclose which banks would prefer not to do. If a property needs a repair, the banks will usually NOT take care of it nor will the seller. So get used to the idea that you may not get everything you want, but you will likely still get a good deal.
Many real estate attorney's now have a great of experience with short sales, just make sure you have such a person on your team.
Best of luck!
Disadvantages: Might not ever go through.
Often takes a long time to get any answer at all - months to close is common if if closes at all.
Homes are often not well cared for.
Homes are sold as-is with no one willing to do repairs.
Could be unknown liens that are found at the last minute which causes more delays.
Banks often want more than the listed price.
Listed price is not approved by the bank so be ready to pay more.
Banks don't counter like a normal seller and will ignore offers.
The biggest thing you need when looking to purchase a short sale is patience. You can get some good bargains going this route but they are usually sold in "as in" condition. This puts the onus on fixing anything on your shoulders. The average short sale usually takes about six months to pull together and some banks require that you go into contract even before they will negotiate the price. The best thing you can do for yourself is get an agent who is short sale savy, a mortgage consultant who knows short sales thoroughly and also an attorney who specializes in real estate law. If I can assist you in anything else, please feel free to contact me. Thanks and good luck.