Traditionally, the words ‘short sale’ are music to a buyer’s ears; they mean the buyer will be getting a home at a great deal, and usually in a manner that benefits all parties involved, as the lender recoups losses on their defaulted loan and the process moves quickly through closing. However, surprising new research shows that short sale may have attained a certain stigma in the buying community, according to a prominent foreclosure attorney. Why this could be is the subject of recent debate.
Short Sale Pitfalls
For the buyer, according to this foreclosure attorney, now is actually a terrible time to look at short sale homes. Banks are incredibly stingy about approving sales on such homes, timid after having been burned once on a defaulted loan, and can take a discouragingly long time to process such sales. In fact, now some sellers are advertising homes as ‘not a short sale’ to avoid the possible stigma.
The recent study cited was conducted in Florida, and found that homes advertised specifically as not short sale homes sold for anywhere between 2 to 5 percent more than comparable short sale homes, and nearly 15 percent faster. However, some people are pointing out holes in the study, since the area in which it was conducted is one of the most rife with foreclosures and short sales in the country, which could skew the results.
Real estate agents are even advising first time homebuyers to avoid short sales, as the difficult process can be a real deterrent to home ownership, and can take up to four to six months from start to finish, a very long time for someone looking to move into their first home.