By Jeremy Lehman | Agent in Orange County, CA
If you are in the market to purchase a home, you've undoubtedly heard about shortsales, and maybe even been "warned" about them. I just read an article in the OC Register stating that 70% of homes in escrow in Huntington Beach are distressed properties (read here http://huntingtonhomes.freedomblogging.com/2010/01/27/70-of-hb-homes-in-escrow-are-distressed/81921/ ). Because of the lack of Bank Owned (REO) inventory in our market, Shortsales are replacing them as "The Best Deal" out there. Shortsales will most likely dominate our marketplace over the next couple of years because we have record numbers of homeowners unable to make their mortgage payments. Over 37,000 in Orange County in 2009 and that number is expected to be much higher in both 2010 and 2011. Because most homeowners in trouble won't qualify for a loan modification, their home will become either a shortsale or foreclosure. A bank would rather the home be sold via shortsale than foreclose because the costs can be much lower. Also, it finally seems that at least some banks have been able to streamline the sales process shortening the timeframe of a shortsale by several months.
Buying a shortsale can be challenging, and if you are selling your home as a shortsale, it can be a very frustrating experience. However, there is a payoff for both the buyer and seller, and if you are using the right real estate agent, the stress can be minimized for you.
If you are a buyer of a shortsale, the process will take some time, possibly up to six months, so patience is a must. The good news is you'll typically get a great deal on a short sale.
For a seller, the real payoff of course is getting rid of the home and in most cases, erasing the negative equity on the property. In some cases (if you still have decent credit and were not late on your payments), you can even purchase another, more affordable property if you like.
So, if you are looking for a home, there is a high likelyhood that most of the homes you are looking at are shortsales. Work with a good agent, have patience, and negotiate a good deal.
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