If you have not noticed the current market is full of Short Sales. At least 40 % of all inventories in Folsom are Short Sales. The banks and investors that hold the distressed property mortgages are increasingly more interested in disposing with the properties through short sales rather than foreclosure. This is true for a couple obvious reasons.
- It is easier on the seller or current owner
- The bank and investor do not have a vacant house to maintain.
- The municipalities were levying fines for grass not cut or lack of maintenance.
However. As we all know there is a downside. These banks and investor groups all have rules under which they have agreed to operate. All these rules and contracts are slightly different. Since the banks seldom own this paper (mortgage) they have to “negotiate” with the actual owner / investor as to what price or offer to accept.
No one is very excited to agree to lose money so these decisions are put off to the last possible time. On top of that, the banks were staffed up to handle foreclosures and now they are getting two short sales for every foreclosure and are understaffed.
All this means the well intentioned buyer makes an offer in good faith and may even get it accepted. If you do not get it accepted (in my opinion) you should walk away.
Then it goes to the bank for approval and sits and waits there until someone thinks it important enough to look at it. This could either be either an approaching foreclosure sale date or particularly good agents nudging it along.
All of this takes about 3 months and the buyer has to be patient. That also means that during the 3 months the buyer is making other offers. That is why 50% of all short sales fall out.
So, in my opinion, you should not be afraid of short sales. Some of the best deals come as short sales here in Folsom. But be prepared:
- Find an agent that has patience and experience.
- Someone who is not afraid to tell you the truth and not willing to waste your time.
- Don’t be afraid to take a backup position on a property you particularly like because short sales fall out.