Buying Purchasing Short Sale Property

More and more short sale listings show up in MLS. These properties are listed at pretty low prices, however you have to  take into account that in most cases this will not be the purchase price (even if you make a full price offer) as it is considered a start amount for an auction-like negotiation between seller, bank/lender and various potential buyers.  Because of this low listing price many clients think that this house has to be a bargain - which is not the case as it only serves to create interest among potential buyers and to stimulate them to make an offer.

At this type of sale the current owner cannot satisfy the recurring monthly mortgage payments and is asking the bank for a debt reduction or even a forgiveness.  For example the mortgage is $200,000, the home however has a market value of only $130,000. The bank will now examine  if and to what extent the debt can be reduced.  The primary and crucial factor of course is the financial situation of the mortgagor and the market situation. This negotiation, which can also be done by a lawyer on behalf of the seller, can take a very long time (9-18 months are not rare). Some people associate a quick transaction with a short sale, which is not the case and actually the exact opposite. In some cases it can happen that no agreement comes about and the house will be going into foreclosure then. The lender however usually tries to find a solution as this also means a reduction of losses.

The original problem goes back to the years 2004-2006  where banks have massively given away excessive mortgages and loans because of the increased property values. The today still very high monthly mortgage payments combined with the extremely collapsed prices a situation developed which a lot of owners cannot cope with anymore.

It can happen that after months of waiting for an answer all you get is a short and simple NO. Then you realize that you have lost a lot of time in which the market has moved on. So do not only focus on short  sales - there are plenty of other great deals out there, traditional ones and foreclosures - and I am here to find them for you!