considering the pros and cons of looking at short sales...

Asked by David B, Lauderhill, FL Mon Feb 7, 2011

I hear a lot of negative comments about purchasing a short sale property, mainly to do with the uncertainty, given that a third party (the debt holder) has to have a say in the deal before it can close. Having said that, would it be a reasonable strategy to pursue a short sale property, if I have lots of time and am in no rush to make a deal happen? I would be interested to hear the perspective of Realtors who deal with this issue on a day to day basis.

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Tammy Hayes, Agent, Port Charlotte, FL
Mon Feb 7, 2011
BEST ANSWER
Buying a short sale is not like buying a property in a traditional way. A short sale may have some risk but it also can be very rewarding. When you are searching for a short sale you will want to make sure you are prepared. Here are some things you will need to consider.

First of all, you need to make sure that you have enough time. It takes anywhere from 30 days to 6 months or even more to get an answer on a short sale. It really depends on many factors. The bank may come back with a counteroffer or reject your offer completely. In some instances you may not even hear back from the bank at all.

Short sales take a long time because the bank has to review it and they are back logged with many short sales and don't have enough coverage to complete them in a timely manner. The bank typically is willing to work with the seller and buyer on short sales to help avoid foreclosure.

One of the benefits of buying a short sale is that the bank is typically willing to accept less money for the property because of the time and risk involved. So you generally are getting the home at below market value.

If you have the time to wait, a short sale is a good way to go. One thing to be sure to ask when purchasing a short sale is, "who is handling it?" Is the Realtor an experienced short sale expert? Or is the listing agent using a Short Sale company that strictly focuses on short sales? By having someone with knowledge and expertise in short sales, it will make the process go much smoother and faster.

Tammy Hayes, Realtor, Sandals Realty, Punta Gorda, FL tammyhayesre@gmail.com
0 votes
Phil Rotondo, Agent, Melbourne, FL
Mon Feb 7, 2011
David,
Find the home you really really like and fits all your criteria.
If you have the time to wait, you can add short sales to the list of homes you would consider.
Once you find the right place, write a contract on it.
If it was meant to be it will happen.
Web Reference:  http://www.321property.com
1 vote
Patricia Uri…, Agent, Sterling Heights, MI
Fri Apr 22, 2011
I think there are certainly benefits to purchasing a short sale property if you have the time to wait for the lenders approval. The home is usually occupied and being maintained by the owner. Whereas a foreclosed home is vacant with opportunity for vandalism, frozen pipes, squatters, etc.. The property is usually price somewhere between non-disstressed property values and distressed property values. I feel there are great values out there if you want to put in the wait time.
0 votes
Alma Kee, Agent, Tampa, FL
Fri Apr 22, 2011
Hi David,

Also you have to realize the asking price on Short Sales are "ficticious" so it may not be possible to buy the property even tens of thousands above the ficticious asking price set by the Seller/Listing Agent.

And you need to factor in the risk of the house sitting empty for months on end without electricity and air conditioning so you may need to remediate mold issues once it eventually gets approved to sell. This may be 6 months or even a year from now.

Hope this helps.

Alma
0 votes
Lisa Cannata, Agent, Osterville, MA
Fri Apr 22, 2011
Short sales are perfect for the buyer who is not in any rush with lot's of time on their hands. Do understand going in that not all short sales make it to the closing table. Quite often there are two and sometimes even three banks involved in the approval process. While you certainly can end up with a good value try not to put all your eggs in one basket. Make sure you put an offer in with a knowledgeable Realtor who has had dealings with short sales and that you are well protected with supplements to the standard offer to purchase form. The company I work for has had an Attorney draw up a particular form protecting the buyer from specifics related to Short sales. Largely the ability to walk away without recourse should they choose to do so as no one should be forced to be tied up for months and months if circumstances change during that period. Also, be sure that the short sale you become involved in is being handled by a negotiator an attorney with experience in these transaction as well. Often the homeowner who has chosen to do their own does not have enough experience to see it to the end. Good Luck
0 votes
Gita Bantwal, Agent, Jamison, PA
Fri Apr 22, 2011
It depends on your motivation. I have read of cases where the bank has foreclosed on a house while the buyers were waiting for approval of short sale. Are you looking to buy as an investment or to live in the house. ? If you look around you may find motivated sellers who will list at a price low enough to make it as good as a short sale.
Web Reference:  http://www.gitabantwal.com
0 votes
Susan J Penn,…, Agent, Weston, FL
Wed Apr 20, 2011
Are you looking for a great price on a home, are you pre-approved and do you have patience? These are the three key ingredients for a buyer. Short sale homes are usually in much better condition than a foreclosure home and you are not in a multiple offer senario.

Susan Penn, PA, SFR
EWm Realtor
2000 Main Street
Weston, FL 33326
954-557-5993
0 votes
Alma Kee, Agent, Tampa, FL
Mon Feb 7, 2011
Hi David,

If you and your agent have the stamina to keep looking for months on end and make cancellable offers on several short sales then I recommend you go for it. Also another thing I've been doing is I write in the contract that the Seller gives me the authority to discuss his account with the lender(s) and I get an authorization letter.

Good luck!

Alma
PS Also one other negative aspect is you will need to plan on all of the appliances and light fixtures to be missing. Plus you should plan on paying the cost to turn on utilities for inspections.
0 votes
Eli Givoni-S…, , Boca Raton, FL
Mon Feb 7, 2011
Short sales create a great opportunity to get a property at a great price. We are a professional short sale service and would be happy to explain the process to you. Please call us directly to discuss your specific situation. We look forward to hearing from you.

Eli Givoni, Director
Short Sale Department, LLC
561-361-1909
info@shortsaledept.com
http://www.shortsaledepartment.com
Serving all 50 states
0 votes
Joseph Domino, Agent, Scottsdale, AZ
Mon Feb 7, 2011
The thing with Short Sales are is that every one is different. You must do your research. Determine if the home has been pre-approved, and at what price (listing price is meaningless). Place an offer at or near market value. Determine how many loans and the type of loan. Determine the Sellers financial situation (often hard to do) and the Sellers agent's expertise, etc.

Yes you can get a great deal on a Short Sale home, but for a Short Sale to complete successfully a combination of things must occur. Some homes are good candidates for short sale, some are not and will likely go to foreclosure.
0 votes
Antonio Vega…, Agent, Saint Cloud, FL
Mon Feb 7, 2011
David:
I usually recommend against short-sales due to the issues you are already aware of.
I make the exception when buyer is simply an investor:
A. The buyer has no time constrains as to closing date ( it could be 3 to 12 months to close)
B. The buyer has nothing to loose but time (it may not close at all)

Therefore you seem the perfect buyer for a short-sale. I will recommend you make sure your agent insert a clause into the contract that say "if the offer has not been signed by both seller and 3rd party in ___ days" it will expire (usually 21-30 days), that way you can go after something new on the market. You can also add a similar clause relating to contract expiration, so that you may cancel and move on without risking your escrow.

Also, look into foreclosures...they usually are cheaper and safer deals.

Tony Vega
Charles Rutenberg Realty - Orlando

http://www.SearchKissimmeeHomes.com
0 votes
Annette Law…, Agent, Palm Harbor, FL
Mon Feb 7, 2011
David, if you have lots of time and copious patience, a short sale would be a good path to take. Other variables related to the homeowners situation should be considered also. But yes, you are the perfect candidate for a short sale purchase. Discuss with your agent those variables that may often create lender/investor impasse. Unfortunately, by the time most consumers become aware of the availability of a short sale, the best options have disappeared.

Also, be aware, if you are financing this purchase, the banks are putting home buyers through a grueling examination of the borrowers financial history.

Annette Lawrence
ReMax Realtec Group
727. 420. 4041
Web Reference:  http://www.MyDunedin.com
0 votes
Angela Schra…, Agent, Pembroke Pines, FL
Mon Feb 7, 2011
David: Firstly, if you find something you like on an approved short sale, then go for it. All the uncertainty has gone and, unfortunately for the lender and seller, so has the original buyer - usually they get fed up with waiting. This leaves the sale ready to close and eager for a new buyer. These move very quickly.

However, unapproved short sales are a totally different kettle of fish. I've had s/s deals that have been approved in 45 days (very much the exception) and others that have taken 9 months. I know of other Realtors that have waited even longer, over a year, for their short sales to be approved. If you're in no rush and you have the patience - remember everyone thinks they have patience but it can be a long, long time, then I'd recommend against them. Having said that - you can pick up some excellent deals on some very nice properties. They're usually in better condition because most have the owner still living there.

Work closely with a Realtor who has experience in this market - and these days it's most of us!! Definitely don't do it alone. I ask a lot of questions of the selling agent to make sure this is worth committing to, or if it's just a delay tactic before foreclosure. The price too, has to be realistic and I ask a questions about that too and do my own research. If the bank isn't going to approve the price, then it's just a waste of time. I often see some ridiculously low prices out there that I just know won't get approved and I'm usually right. Remember, every bank has it's own BPO (appraisal) done prior to approving an offer.

Personally? I deal with lots of short sales and honestly, I wish it were otherwise. I like to keep my clients updated and be on top of things and it's so difficult to give status reports. The banks work at their own pace with no rhyme or reason to anything. They're very frustrating but if you can deal with all of that AND the possibility that after waiting 3 or 4 months or more, that you'll get the offer turned down... then go for it!

I personally encourage people to determine what they want, where they want it and determine their price range. You'll be surprised at how many regular sellers are competing with the distressed property market.

Good luck to you!!

Best regards,

Angela
Villa G Realty, Inc.
Tel: 954-816-7996
Web Reference:  http://www.villagrealty.com
0 votes
Karen Levy, Agent, Mount Dora, FL
Mon Feb 7, 2011
David,

Set a goal of finding a high quality well maintained home at or ery near the price of CLOSED short sales.

More and more sellers are pricing their homes in line with the current market.

So while the rest of the crowd is chasing the "good deal" you can go another direction and get the best overall value.

The only thing certain about a short sale is uncertainty.

Ray Levy
Coldwell Banker Camelot Realty
Mount Dora, FL 32757
352-978-8551
0 votes
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