In previous posts titled Foreclosure Terms and Buying a Bank Owned Property, we began talking a little more about foreclosure issues. Today, I want to delve a bit more into the specific area of purchasing a short sale property.
As a recap, the term short sale refers to a situation in which a lender will accept a payoff of an existing mortgage on a home that is less than what is owed. This is primarily done because the current market value of the property being sold is less than what is owed.
So, why are we talking about this issue? Because if you are looking for a homes for sale in Fredericksburg, you will certainly encounter "short sales." There are lots of them in the Fredericksburg real estate market. Therefore, it is important that you, as a buyer having some understanding of short sales, but.... it is critical that your real estate agent have solid understanding of the issues.
That last statement is so important, I am going to repeat it... it is critical that your real estate agent have solid understanding of the issues. Why? Because not only do they need to understand short sale issues from a buyer standpoint, they need to understand them from the selling standpoint as well. This is because many agents listing short sales have no idea what they are doing when it comes to working with short sales.
OK, the first issue to understand that when you are purchasing a short sale property, generally you lose a lot of options that you would have with a typical listing...
As a general rule, short sales are sold "as is." This means that if a home inspection or final walk through inspections produce issues that need to be corrected, it is unlikely that the seller will be willing and/or able to pay for correcting those issues. And, unlike most traditional sales, there is no proceeds for the seller once the transaction is closed, so they can't pay for repairs from proceeds.
Secondly, they usually can't or won't help with closing costs for the buyer. That is a big one in this market. As a rule in the current Fredericksburg real estate market, an aggressive buyer agent is able to negotiate the seller paying the closing costs for the buyer in the majority of traditional/non short sale listings.
Thirdly, the process will likely be much longer than a traditional purchase, and loaded with other potential issues. When you look for homes in Fredericksburg and buy a traditional listing, you can expect to settle the transaction and move into your new home in 30 days or less. With a short sale, that same process can take 60 or 90 days, with potential deal killing pitfalls all along the way.
In summary on this topic, a short sale MAY represent a good value for a buyer... but make sure you and your buyer's agent are fully knowledgeable on how to protect your money and interests in this type of transaction.
Jeff Edmisten
The Edmisten TEAM
Keller Williams Realty
(540) 538-7222
jedmisten@kw.com
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