Compare 3 scenarios below:
1) Short sale: Offered for sale at 300K. Comps support 350-360K. Loan balance is 365K. (Assume only 1 lien.) 4 offers made, ranging from 290K-322K. Bank rejected all offers and property went to foreclosure auction. If the bank would have accepted an offer, it probably would have been a win for all parties. The seller would have avoided a foreclosure, the buyer would have a good deal, and the bank would have a better net bottom line than they most likely will after an auction and REO sale. But, the bank rejected all offers. If you were one of the buyers, you invested time in the hopes of a good deal. But, it was gambled time, with no positive results. Was it worth the time invested? Probably, because, you might have gotten a yes from the bank.
2) Short sale: Offered at 280K. Comps support 260K. Loan balance is 310K. (Assume only 1 lien.) Cash offer at 280K, requiring no appraisal for mortgage. Was this a good deal for the buyer? Not if the comps do not support 280K. Simply because the purchase price is below the loan value does not mean it is a good deal. If you bought it for 260K, does the deal make sense? Itâ€™s fair market value. Are there other properties that would equally meet your needs that can be purchased at fair market value? If so, why take on the extra burden, stress and uncertainty of a short sale? If no other property meets you need, then, yes, the aggravation of the short sale is worth it at 260K (fair market value.) If you love the property, and you know the comps support 260K, but you really want the property and are willing to pay 280K, then you can do that. A good buyer agent will help you make informed decisions. Ultimately, the decisions are yours.
3) Short sale: Offered at 520K. Comps support 590K. Multiple offers result in an accepted contract at 545K. You just bought a property for 45K under market value. It was a lot of headache. The process took 5 months. You missed work, you fought with your spouse, and you kept looking at properties every week, just in case this did not work out. Was that worth 45K? For some, the answer will be an boisterous and resounding â€œYES!â€ For others, the answer will be, â€œForget about it. Donâ€™t do it.â€
In the end, the answer is, â€œIt depends upon you and it depends upon the property and circumstances.â€
Deborah Madey - Broker
Peninsula Realty Group
If you need a home, to live in, buy something certain. In a short sales it can die minutes before closing. Sellers can file bankruptcy and hold off some sales. Many many other issues could arise.
I wasn't going to answer this questions because it could give false hope to a person in real need. Don't gamble on a home. BUT yes, try to buy a cheaper house. good luck
marc williams 732-778-9933
1) The degree to which, at the current list price, the home achieves high ratios in meeting your sought objectives, both tangible and intangible (lifestyle needs, style, financial, etc);
2) The difference between market value and list price;
3) Whether the ratio between 1 and 2 reflects an uncommon cost/benefit to you not likely to be easily achieved again in the future.
Working with your Realtor, you should find it relatively easy to ferret out whether it's worth putting in an offer. And remember, the aggravation experienced is usually by the Realtors and the seller, as they are the ones who will be marshaling the short-sale process with the lender(s). As the Buyer, you are in the position least likely to experience aggravation, -- provided the bank approves the short-sale.
So long as you can accept a protracted escrow (30-60 days, generally), roll with the fact the lender(s) may be non-responsive for days or weeks at a time, graciously recognize that short-sales are not guaranteed sales, and stay occupied to keep your mind off the transaction, the experience should not put you over the edge and will possibly provide you a great home at an uncommon value.
Blake Voorhees, Realtor, Windermere RE Co, Seattle WA (206) 524-1100
The only aggravation is the time you have to wait for the bank's to make a decision. In todays real estate market you can get good deals.
You can actually hire an attorney to represent you. to get a list od Short Sale properties, check the link below.
Here is the information for a short sale specialist
Mr. Charles M. Damian (Lawyer)
Prudential New Jersey Properties