The term "short sale" is getting thrown around a lot lately and it seems to be the trendy thing to discuss these days regarding real estate. However, many people still don't really understand what the term means. If you are one of these people, here is a link to a brief video describing the basics of a short sale. And if you want more details, check out the Wikipedia entry.
Ok, so now that we all know what a short sale is, let me tell you a couple additional things to consider when deciding whether to get involved in a short sale.
For the Seller: You'll want to work with an experienced Realtor who is familiar with the short sale process (not every Realtor knows short sales), and can help guide you through to closing. Remember, in a short sale, the lender will not allow the seller to make money at closing, because the lender is losing money. So there is no money coming to you either way, and a good Realtor can help simplify the process for you and increase your chances of success. Also, you can sell personal property such as appliances, riding lawnmower, to try to put a little money in your pocket. Lastly, the process generally takes at least a couple months after you've found a buyer, so you are likely to have a free place to stay for several months.
For the Buyer: Some good deals can be had in a short sale purchase. However, the price depends on several factors; the motivation level of the lender to sell quickly, and also the lender's opinion of the property's value are both crucial. Some properties sell at significant discounts, but many are sold within 5-15% of market value, and I've even seen cases where lenders will try to demand an sales price well ABOVE market value! If you are looking to buy and be in a home quickly, I would not recommend pursuing a short sale. First of all, there is no guarantee the sale will be approved by the lender at a reasonable price. And there is no telling how long it will take, especially if the lender is overwhelmed with foreclosures, as many are these days.
I hope this gives you a decent understanding of short sales. There is certainly more to it than that, and if you have other specific questions, please feel free to call anytime, I'm happy to discuss it with you.
Don't forget interest rates are still right around 5% on a 30 year fixed mortgage, which won't last forever. It's a great time to buy a home or a rental, so give me a call if you'd like to see what's out there. I can run a custom search and email you properties meeting your specific criteria.
Thanks for reading, and please call any time if you'd like to talk real estate or even if you just need the number of a good handyman etc.
P.S. The majority of my clients come by referral. My valued clients refer their friends, family and coworkers to me for local real estate advice, and to help with relocation to areas outside Washington. I am committed to building trusting, lasting relationships, one person at a time. Who is the next person you know who is considering purchasing or selling real estate? I'd be happy to talk with them and see how I can help.
Dan O'Donnell, 360-220-7157
RE/MAX Whatcom County, Inc.