Home Buying in Salem>Question Details

Karga1825, Home Buyer in Salem, OR

what are the cons and pros to buy a shortsale then a regular sale?,I'm first time buyer and I'm kind of scared

Asked by Karga1825, Salem, OR Mon Nov 12, 2012

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This is a very good question. You need to be really careful who you are working with and that they truly know the ins and outs of short sales. Your buyers agent needs to have a great or working relationship with the listing agent with weekly follow ups. The short sales are getting much quicker as many Lenders are now pre approving short sales so they give us an approved price up front those s of course are the ones we like to deal with :0)

The challenge with "shorts" is sometimes the agent is kind of fishing for a offer to see if the Lender will accept and too often they won't as it is too low. This can then be time consuming but of course you aren't locked into the deal until the Lender approves and you accept so you can continue to look.

If you need help just call my cell phone is on! 503-999-HOME (4663)
0 votes Thank Flag Link Sun Feb 10, 2013
Karga,

The simple difference between a short sale and foreclosure is that the short sale can take significantly longer. This depends on the agent's experience handling short sale, and a big part of it depends on the lender and the cooperation of the sellers. A regular purchase is the agents dealing directly with ready and motivated sekkers, Some short sales will fail due to issues in getting utilities turned on, disappointing inspections (which frankly could happen on any sale, but more so on a short sale.) and missing other properties on the market while you wait. If there is repair work to be done prior to closing the sale, the short sale lenders typically will not make repairs. However, this said, it is definitely worthwhile to look and consider short sales if you are not in a strict timeline to acquire the property.

Karen Morrison, Licensed in the State of Oregon,
Legacy Real Estate
karenm@legacyre.com
503-930-4030
0 votes Thank Flag Link Thu Jan 17, 2013
I've been involved in several successful short sales that also were great deals for the buyer. However, short sales are not without risk (not counting the inconvenience of longer-than-usual closing times). Some risks include losing money invested in inspections (when a previously approved sale later fails to close), difficulty in completing inspections because of utilities being disconnected, losing out on a better property while waiting for an uncertain closing of a short sale, etc., etc.

Some short sales are more difficult than others. It depends on how good a job each property's listing broker has done in preparing his/her listing for the short sale, and on what lender the seller has. Short sale properties can be time-consuming and frustrating to work with, but they can pay off in a big savings over current market prices. However, you can often also realize similar savings on REO (foreclosed) properties, but without all the wasted time, money and headache. Most active brokers have experience dealing with both short sales & foreclosures.

Many short sales are eventually completed through time and patience. Many other short sales, however, blow up at the last minute, when the property ends up going to foreclosure, despite the accepted short sale offer. This is all perfectly legal, and not uncommon. All contracts and short sale documents must be read carefully.

I would not recommend against a short sale, but I would recommend that you hire a good agent to counsel you as to risks and benefits, especially as they apply to specific properties that are on the market. Only then, can you know if a short sale might work for you.

Good Luck!
0 votes Thank Flag Link Thu Nov 15, 2012
Be cautious & have a good REALTOR as not all short sales & foreclosures are good deals. Many are only short sales as the sellers have pulled all the equity out when the market was at its peak & owe way more then the property is worth in a normal market. Have your REALTOR provide you with a good market analysis so you know for sure that you are getting a good value.
0 votes Thank Flag Link Tue Nov 13, 2012
Pros are you get a great buy normally-the cons are you have to have patience=it takes a long time and second- a short sale does not allow for repairs. You will need to make sure the home wont require a lot of repairs by the lender or be able to get the type of loan that will allow for repairs AFTER you close not before!
0 votes Thank Flag Link Mon Nov 12, 2012
Karga,
Time and certainty. The time will be unknown until you get approval, anywhere from 60-120 days or more, if it even comes. Many short sales are either declined without a counter offer or are foreclosed on while in process. You can go 6 months and even have an approval only to find the banks foreclosure department isn't speaking with the short sale department and the home is gone.
As a first time buyer, looking for a primary residence I would discourage you from riding the short sale roller coaster. The frustration and disappointment is more than most first timers need to deal with.
0 votes Thank Flag Link Mon Nov 12, 2012
Cons: They can be a long drawn out-process although I have seen a few painless transactions if you are lucky and find a short sale that has been pre-approved and/or with a local bank vs one of the big banks. Occasionally there may be a second lien-holder or mortgage insurance company that comes back with their hand out last minute asking for more. Did I mention long and drawn out?

Pros: Some great properties at great prices oftentimes from sellers that haven't trashed and/or stripped the house of everything.

My tips: Have a rock solid mortgage pre-approval. Work with a seasoned agent who has a ton of experience working with shorts. Worth it if you have the luxury of time.
0 votes Thank Flag Link Mon Nov 12, 2012
In addition to what Robyn said below, short sales are done with no repairs, so you need to take that into consideration when looking at your loan and the condition of the home.
0 votes Thank Flag Link Mon Nov 12, 2012
There are certainly both advantages and disadvantages to a short sale.

First let’s explore the pros;
Price – even though the market establishes price/value for almost every home sold it is accurate to say that short sales are typically sold at under-value prices.

Condition – typically short sale properties remain occupied long into the listing period and are therefore likely to have fewer and/or less severe negative or neglected conditions.

Financing – better condition generally means easier financing

Seller cooperation – in most cases (if the listing agent has done their job well) the owner realizes it is in their own best interest to cooperate and expedite the transaction.

Equity- because the homes are sold in distress it is somewhat more likely the buyer will find themselves in a positive equity position sooner.

So then on to the cons;
Time – short sales mean there is another interest (bank, lender, and investor) involved in making decisions. This can cause a transaction to take unbelievably long periods without any clear explanation as to why.

Frustration – because the buyer finds themselves at the mercy of someone (bank, lender, investor) they and their Realtor never get to communicate directly with, it leaves you feeling somewhat out of control of your own life.

Fail to close – sometimes the transaction takes so long the lien holder decides to foreclose on the homeowner, leaving the potential buyer with nothing to purchase

Bottom line is this. If you have a place to live without strict duration time limits and can find yourself a knowledgeable Buyer’s Agent Realtor with multiple closed short sales experience there are great deals to be had.

Good Luck.

PS. No one can walk you through a short sale better that a trained, qualified, professional Realtor

If your looking in the Salem area I'd appreciate the opportunity to visit with you.

Once again Good Luck, home ownership is a wonderfully fulfilling experience.
0 votes Thank Flag Link Mon Nov 12, 2012
Hi there, I manage several short sales a year and to be honest with you, if you have a realtor that knows how the short sale process works, it can be a great advantage to you as far as value. The only disadvantage I can think of is the waiting you will have to endure while the bank makes their decision. It can take 60-90 days. A typical resale property can be closed in 30 days. While waiting for bank approval you could miss out on a great inerest rate lock also.
I would just suggest making sure your realtor knows the process and you will be just fine.
Please check out my website at http://www.johnlscott.com/robynjones for answers about short sales.
Thank you.
0 votes Thank Flag Link Mon Nov 12, 2012
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