Home Buying in 08012>Question Details

Lwebb26, Home Buyer in Lawnside, NJ

What are the disadvantages in purchasing a home that is a short sale?

Asked by Lwebb26, Lawnside, NJ Wed Sep 19, 2012

Help the community by answering this question:


First thing, you must be willing to wait typically 3months to a year or more...with no guarantee that the bank will accept your offer. Also, usually sold "as is"...buyer is responsible for any/all repairs most cases. Banks typically keep the home on the market, for higher or better offers, but giving the first buyer "first fight of refusal".... also...buyer usually doesn't have a counter until months later....
it's a real waiting game... contact me for more information...
0 votes Thank Flag Link Thu Nov 15, 2012
Time and uncertainty. I think short sales are best suited for investors who are can roll witih the uncertainty. I've helped both sellers and buyers - have two in the works right now. The frustration is high on both sides because the control that sellers, buyers and their agents have in a normal transaction is lost to the bank/investor.Plus since the property is in distress, it is highly likely that condition may be an issue - if the seller doesn't have the money to pay the mortgage, then they may not have the funds to keep the home in good order. And ultimately it is the bank that makes the decision - the bank is losing money by definition and so they are very unlikely to make repairs - you should enter into any short sale with the expectation that it will be delivered strictly "as is".

The only advantage for your time and trouble is the lure of a below market deal. But the banks are looking for closer to market value than in the past.

Jeanne Feenick
Unwaveing Commitment to Service, Unsurpassed Results
0 votes Thank Flag Link Fri Sep 28, 2012
Buying someone else’s train wreck would be my first concern, has the property been kept in top condition? Second, most, the majority of so called short sales do not close. Are you willing to devote the next couple of months to chasing a unicorn? My wording is a little tough but not by much, I have only financed one or two purchases that were short sale, have had many applications that did not work out. It is hard enough to close a deal under current mortgage conditions let alone finance a train wreck. Oh yeah, the guys in my office are already arguing over where they are going to have lunch. Can’t agree on something that simple, get a bank to write down a mortgage, how does that compare to where we having lunch? Good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
0 votes Thank Flag Link Wed Sep 26, 2012
The only disadvantage I can think of it is consumes too many minutes of my mobile calling plan.
Yeah, that's the only disadvantage I can think of.
Well, the 70% failure rate should be considered.
Then there's that illusion of rules contradiction, pages and pages and pages of controlling documents and in the end, anything can and does happen in this "Wild, Wild, West of Real Estate."
Well, then there that 'black hole' of communication. Everything goes in, nothing comes out...for months and months.
Well, then let's not overlook the fictitious price situation. You think it's offered for sale for $200,000 but the bank says, 'No, we think it's worth $320,000."
Other than those irritants, the major deal is exhausting my cell phone minutes. ;-)

Best of success to you,
Annette Lawrence, Broker/Assocate
Remax Realtec Group, Palm Harbor, FL
0 votes Thank Flag Link Wed Sep 26, 2012
The greatest disadvantage is that you are buying the home strictly as is. The condition it is in when you 1st see it may change by the time you are ready to close. If anything breaks during that time it is your responsibilty to correct it since the owners receive nothing from the sale.You will also need to get all permits , & required certificate of occupancy inspections before closing .
0 votes Thank Flag Link Wed Sep 26, 2012
Hello Lwebb26,
Thanks for your question.
Disadvantages I see:
1.- Uncertainty of closing time. The bank may take longer than 90 days to close both parties will have to agree to extension if that happens. In some cases the bank does not agree to terms and closing does not happen.
2.- Uncertainty of price. Bank could give you a counter even after you and the seller have signed the agreement.
3.- Property is being sold normally in AS IS condition. Meaning that if repairs are needed, buyer will to be responsible for them. I strongly recommend to do all the inspections to know what may be working and not. It gets tricky when the property is winterized and all the utilities are off.
4.- Buyer has to obtain all the certificate of occupancy and fire inspections required by town where the home is located.
Those are the main ones.
If you have more questions do not hesitate to contact me.
Take care and good luck in your purchase.

Ines De La Cruz, Realtor, ABR, CRS
RE/MAX Connection
0 votes Thank Flag Link Wed Sep 19, 2012
In addition to all the cons listed below.......I can sum it up by saying one word......Uncertainty..... on ALL levels (time frame, dollar amount, condition, etc) - is the operative word when attempting to buy a short sale.

Still want to consider buying one?
The are not necessarily the bargain many consumers think they are.
0 votes Thank Flag Link Wed Sep 19, 2012
In addition to the long wait, as-is, and no promise it will go through, is the risk that who ever is living in the home may not move out on time, they may not clean it, and may leave personal items behind.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Wed Sep 19, 2012
Depending on which bank is making the decision time is the biggest factor. Many times approval for short sales are being done ahead of the short sale. The only thing to approve is the price.

Each bank handle negotiations different than others. Also the programs being approved under could make a huge difference the wait time.

When buying a home "as is" , this should always bring up a red flag to a buyer. Unless you are a savy investor, some of these homes need repairs beyond what the average buyer can handle.

Make sure you have the home looked over by a professional home inspector or contractor... And do it right away, don't wait for the approval.
I just showed a home in Audubon that had a disclosure, but an inspector revealed damage in the foundation.

If I can help you see some homes you are interested in buying call me.

Search foreclosures and short sale here: http://www.BuyNJShortSales.com
Search the MLS on your phone by Text: In the subject line on your mobile phone- LSAR1 -to number 87778 ... hit send... A GPS feature for listings at your finger tips
Larry Sarlo
RE/MAX Preferred
609-868-1171 call / text / email 7 days
0 votes Thank Flag Link Wed Sep 19, 2012
A few disadvantages:
1. Many are "As Is" and will not do any repairs. What you see is what you get. Some are still lovely, others not so much.
2. You need to be patient - when you put in an offer, it may take a while before you hear anything. If you have a time constraint, such as having to move out of your current home asap or having a buyer for your current home, this may be an issue.

However, you really could get a good deal on a short sale!

If I can be of any help, please contact me. :) I work out of my home office in Blackwood.

Sherri Bonafiglia
Heritage Realty of South Jersey, LLC
cell 856-371-7272
0 votes Thank Flag Link Wed Sep 19, 2012
The biggest disadvantage is the amount of time you will have to wait for an approval of your sales contract by the mortgage holder. This could take a few months for a decision to be made. At the end, the decision could be that they agree to release the mortgage lien for the agreed sale amount or they could counter with their own figure, in which case one of the parties must come up with the difference to get the lien released. If you're going to go this route you want to make sure you use a professional agent to knows what to watch out for and to watch out for your best interest.

Terry Iwaniw
Residential Marketing Specialist
Web Reference: http://www.iwaniw.com
0 votes Thank Flag Link Wed Sep 19, 2012
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