Is a short sale home a good opportunity for a first time home buyer?

Asked by Rjesz, Holland, MA Thu Apr 7, 2011

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24
Valerie Mitz, , Webster, MA
Fri Apr 8, 2011
Hi Rjesz,

All of the information provided below is good but I just wanted to add a couple of things to it. When you buy a short sale home, generally the owners are in a poor financial situation. Therefore they (usually) won't be able to improve the property in any way. I say this because I have recently helped buyers purchase houses in this part of Charlton and have run in to similar issues.

Many of the homes in this area have well water and they often test high for different chemicals. A lender may not finance the property if chemical levels don't meet certain guidelines. Luckily this is usually an easy fix like shocking the well, but it is something that you may be responsible for doing if you want the property.

Also some of these properties have sump pumps and water problems in the basement. I almost lost a short sale deal because the bank didn't want to finance a house that had water in the basement. Fortunately I know a great guy who was willing to solve the problem and get paid after the closing. this property does say it has a finshed basement so hopefully this won't be an issue for you. But this is something to keep in mind when buying a short sale. If you need any help let me know
Web Reference:  http://www.buywithval.com
1 vote
Jennifer Mu's…, Agent, Arcadia, CA
Thu Apr 21, 2011
Yes!! A short sale can be an excellent opportunity for a first time home buyer. In a short sale you can often get a great deal on a property that you might not otherwise be able to afford if it was a standard sale. This is because short sales often sell a bit below market value. There are multiple reasons for this not the least of which is that the number of people willing to make a short sale purchase is a subset of the market as a whole. If you are willing to be patient and deal with some of issues with a short sale you can take advantage of this. Bear in mind though, as a purchaser you DO need to be willing to be patient and flexible. A short sale can take longer than a standard sale, and more complications can arise. It is for this reason that you need a realtor experienced with short sales who can help speed the process along AND protect your interests. I have a short sale specialty and have seen people get a lot of great deals with short sales but never do it without a qualified agent in your corner.
Web Reference:  http://JenniferMu.com
0 votes
Ron Gabriel, Agent, Hermitage, TN
Wed Apr 20, 2011
"If you have a steel spine and lots of time" Short Sales can be a deal. I much prefer Foreclosures, including HUD, VA, and all types of Bank REO's. I have Sold hundreds of Foreclosures and have had very limited success with Short Sales.
0 votes
Pam Meadows, Agent, Wilmington, NC
Wed Apr 20, 2011
Short sales are great opportunities for first time home buyers. Just understand that the transaction takes a little longer than a regular one. You're not only negotiating with the seller but also the bank. When you hire an agent, hire one who has some experience who can guide you through the process and keep you updated as the paperwork moves through the system. Some agents are better than others at staying in touch with the bank and keeping the seller and buyer informed during the process. Good luck!
0 votes
Star Yang, , Myrtle Beach, SC
Wed Apr 20, 2011
Yes, Short Sale is good for everyone. As a short sale buyer, you must have all your finance in order and be willing to wait the 4 -12 weeks, that most short sales take. We are in a very unusual market. The short sales have made prices drop to true market value, as of today; It is doubtful, that in our lifetime , will we ever see these prices again. So if you are leasing now, start the process. Get preapproved and find a experienced agent to guide you through the process.. Just remember, it's a process.
0 votes
J Mario Preza, Agent, Burlingame, CA
Wed Apr 20, 2011
If you've been looking at houses in this market, you're probably coming across many houses that are going to be either short sales or REO (bank-owned), that being said, whether or not the former is a good opportunity will depend on what you're looking for, how much you can afford, and if you're willing to go through the hoops a short sale requires.

If you're financing your purchase via FHA backed loans, be careful though because FHA has some very specific guidelines that don't always fit well with some of these sales. However, that is true of any house for sale, including the REO's. On the other hand, if you're buying ALL CASH, that changes the whole picture. So, to best guess what you may consider "a good opportunity," consider that most, if not all, short sales are selling for as much as 50 percent discount of their last reported sales price. So you can see how GREAT of a deal you may derive by buying now.
Web Reference:  http://www.myshortsaleca.net
0 votes
Annett T. Bl…, Agent, Fort Lauderdale, FL
Wed Apr 20, 2011
Rjesz,

It is important that you have an agent who knows how the short sale process works (yes even as a buyers agent) and will ask the right questions to the seller/ listing agent or person who handles the short sale. By getting the answer to the right question it can early on be determinate if the short sale will be successful or not and if the short sale will work in your favor. In addition you need to speak with your agent about your buying circumstances, situation and let them know your expectations. Every situation is different.
Take a lock at http://www.TallahasseeForeclosureSolution.com for many short sale answers.

Good luck,

Annett T. Block
Florida Connects Inc.
http://www.FloridaConnectsInc.com
0 votes
Pam Bava, Agent, Rochester, MI
Wed Apr 20, 2011
I have sold Short Sales to first time buyers and I did explain everything going into it. They get a little anxious at times but realized that the wait was worth it. They now have a very nice place and were able to pay cash for it because the price was right. It took up over 3 months to close. As long as you get all of your questions answered you should be ok. I wouldn't rule out other properties though. Homes are put on the market to sell, you can make some very good deals with the right negotiator.

good luck
0 votes
David Lelak, Other Pro, Canton, GA
Wed Apr 20, 2011
I agree with all the yes answers below... One thing you may also want to consider is getting a home inspection even tho you may be buying the home "as is". We have found that folks have a better understanding of the condition and cost of some of the repairs that may be needed and a lot of the times sellers don't have the means to fix them. It may fall on you as a first time home buyer.
0 votes
Sergio Herna…, , Naples, FL
Wed Apr 20, 2011
it can be as long as you can stomach the process and you have a good Realtor and a good lawyer to help you.
Web Reference:  http://www.golftobeach.com
0 votes
Ross Therrien, Agent, Londonderry, NH
Wed Apr 20, 2011
Absolutely. For any homebuyer really. If you have the time and patience and a Realtor that knows the process.
Web Reference:  http://www.nhhomes030.com
0 votes
Pete Whan, Agent, Pasadena, CA
Wed Apr 20, 2011
Yes, but there is nothing short about a short sale...Be Patience.
0 votes
Hezrell Vasq…, Agent, Massapequa, NY
Fri Apr 8, 2011
It all depends on you, How long can you wait, are you willing to have an agent negotiate with the bank to try on getting your offer approved. just to get your mind on trac,The process for buying a short sale, is the same as buying any other home, other than that you're dealing with the bank in this case. Once approval has been granted everything else is the same. Make sure you hired an agent that could guide you threw the whole process and stay on top of it.
0 votes
Tom and Joan…, Agent, Boston, MA
Fri Apr 8, 2011
Home buyer:

As long has you a tolerance for loss and risk then short sales are great. They can be difficult to close and if you want to do it right you should spend some money up front, but they can be very proftitable. Best
0 votes
Marie Souza…, Agent, Centerville, MA
Fri Apr 8, 2011
Yes, short sales can be a great buy! As a first time buyer, they can be nerve wracking, as they take a LONG time. Make sure you have a good Agent & they can walk you through the process.
Good Luck!
0 votes
Jean Sullivan, Agent, Brimfield, MA
Fri Apr 8, 2011
Yes, short sales can be a great opportunity but don't limit your options. Contact a buyer's agent who will keep on top of all possibilities for you. A "Short sale" property may go for less than actual market value but your broker will need to negotiate the price for you. Patience is critical as often the short sale process will take much longer to be accepted. Don't wait in you search! The market is changing daily and you don't want to miss the opportunity to find your dream home.
0 votes
Darrell Hess, Agent, Asheville, NC
Thu Apr 7, 2011
A lot of times short sale accepted selling prices can be less then the foreclosed on neighboring properties. Just depends on the individual investors behind the mortgage note. Your best bet if you are concerned with the price is to have your agent to a CMA in the neighborhood and recent sales up to 1 mile in distance from the subject property. That should give you a better understanding of the price deal you may be getting. Short Sales are nice in my opinion as you usually get a home for less the market value and it was not left sitting to rot for 1 - 3 years like a lot of these bank owned properties out there have. It is all about timing really. Be prepared to wait 2 months from offer to a possible closing date due to the number of people who have to handle the file.
0 votes
Rjesz, Home Buyer, Holland, MA
Thu Apr 7, 2011
Hi all, thank you for your responses. They have been very helpful. I am looking at this house: http://www.trulia.com/property/1030773820-42-Lakeview-Dr-Cha…
I guess I am a little concerned with a short sale process and if the asking price looks reasonable?
0 votes
Jen Butel, Agent, Austin, TX
Thu Apr 7, 2011
It would depend on your particular circumstances and the specific house. A short sale is like any other real estate transaction, except that it typically takes longer and there are seldom guarantees that the bank will accept your offer. If you aren't in a rush and are okay waiting to hear back from the bank then a short sale can work. I've seen many situations where the bank doesn't accept an offer during a short sale situation only to foreclose and sell it for less a few months later.
0 votes
Scott Hulen, , 64068
Thu Apr 7, 2011
It depends more on your situation then anything else. If you are buying only with your head with an investors mindset it could work out well for you. If you are buying with your heart and you can picture yourself, your family & friends in this new home you may be disappointed time & time again by situations that are beyond your or your agents control. There are many " deals " out there and I personally stay away from the short sell market because I believe that many short sales in my area do not close but in up in forecloser. I see it as a waste of my time but some agents claim to be experts who can get the the deal done, maybe so, but by the amount of heartache & headache that I see I choose not to play the short sell game.
0 votes
Amy Mullen, Agent, Shrewsbury, MA
Thu Apr 7, 2011
Rjesz,

As other people have mentioned - it all depends on your specific situation. AND it depends on the house. Banks are very well aware of what the current market value of the short sale property is (and order a valuation with the offer) so if you are looking for a below market purchase soley because it's a short sale - that will probably not happen.

What are you looking at? I am from Brimfield and know the Sturbridge/Charlton/Brookfields area very well.

Amy
0 votes
Heath Coker, Agent, Falmouth, MA
Thu Apr 7, 2011
Anytime you can buy a home, I think it is a good opportunity. A short sale only means that you are buying the property for less than the owner currently owes the bank. You will learn what patience is in a short sale. Also, you as the buyer, have an interesting advantage in that you can see how much the property was worth in an up market, and it may be a value that will be reached again. In any case, you need to take all the normal steps to make sure the property is a good buy apart from being a short sale - inspections, walk through, appraisal, etc. Some short sale properties are distressed, because the owner is short of funds to do repairs as well as pay the bank what they owe. Using a good, local, experienced, professional will help make sure your opportunity starts off on the best footing. Congrats!
Web Reference:  http://www.capegroup.com
0 votes
Anna M Brocco, Agent, Williston Park, NY
Thu Apr 7, 2011
Without much information--much would depend on the property, location, condition, pricing, etc.; short sales are by no means fast sales, unless already approved by the lender, are you willing to wait....what is your agent advising...
0 votes
Sherri Way, Agent, Framingham, MA
Thu Apr 7, 2011
It depends. Short sales can take a long time. You have your offer accepted and then you wait for the seller's bank to get back to you. This could be a while (read this as multiple months). So, if you have to move quickly (your lease is up, you are selling your home), then it probably is not a good idea. If you have time and you find a good deal, then it may make sense to wait it out.

Keep in mind that the seller's bank could come back with a counter offer -- even if you offer full price. Also, if there are 2 mortgages on the house and it is not the same bank, then you may want to stay away from it. In these cases, BOTH mortgage companies have to agree to the short sale and in many cases, the second lien holder will say no.

Good luck!
Web Reference:  http://www.sherriway.com
0 votes
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