Just a few short years ago you would be hard pressed to find a home buyer that was open to a short sale. Carrying a reputation for being difficult and the assumption that there may be something wrong with the home, many people avoided short sales altogether. In today’s market short sales are becoming increasingly popular as many homeowners jump at the chance to secure a great deal on the home of their dreams.
Myths and Misconceptions
Unlike a foreclosure, short sales rarely carry hidden problems or excessive damage. The homeowner who is listing the short sale is in great need of getting the home sold, which means that the home is usually well maintained and lacks underlying problems. Of course any home may reveal some items in need of repair at the time of inspection, but a short sale is generally not going to possess major deficiencies.
Further, short sales may also be negotiated to have certain items fixed prior to sale. While foreclosures are offered in “as is” condition, short sales are often more flexible at the time of finalizing the offer.
Different from foreclosures, short sales are rarely associated with a declining neighborhood or home value depreciation problem. Typically, a lender will not approve a home for short sale if the home lacks value or is in area with depreciation problems.
While short sales may provide a potential buyer the chance to purchase the home for 10-30 percent less than market value, there are some things buyers should consider. The process can be time consuming and complicated. Negotiations are often tough as the seller and the bank are both trying to secure the best price. Buyers could face bidding wars, end up paying over the asking price and may have to wait months to hear about the status of their offer.