An ever increasing number of properties listed for sale in Loudoun County these days are "short-sales". It used to be that most were bank-owned and some were short-sales. Nowadays, it's about 50/50. It seems that home owners are viewing a short-sale as a possible option "out" now more than ever before.
But what affect do short-sales have on buyers and the Loudoun County real estate market?
Many of the emails and calls I get from buyers are in regards to a property they think "is a great deal". But it's a short-sale. Yes, they can be a great deal. But they're not your typical real estate transaction.
- Has the seller already contacted their bank and started the negotiation process?
- Have they submitted all of the necessary paperwork?
- Was it completed correcty?
- If there is more than one lender/bank involved, have all parties been contacted?
- If there is a second (or third) lender/bank, is there a good chance that they'll agree to basically walk with nothing?
- Are there outstanding judgments or other liens against the property?
- Does the buyer have 2, 3 or even up to 6 months to wait for an answer?
- Does the buyer have the time and money to make all the necessary repairs on their own (short-sales are always sold "as is")?
In many instances, the answer to at least some of these questions is "no". Well, the answer has to be "yes" to all of them in order for a short-sale to have a decent chance of actually selling/closing. Otherwise, the buyer may be dissapointed at the negative outcome and/or be homeless because they had to be out of the current residence and don't have a new place to call "home".
Another thing I've noticed is that many of the short-sales seem like they're not as bad off as they lead the bank and public to believe. They have a new Mercedes parked out front, 2 or more top-of-the line plasmas inside, a high-end surround-sound system in the family room or basement, lots of cool new computers and tech gadgets (that aren't cheap), they just got back from a vacation in the Caribbean, etc.
One thing to remember is that the bank will audit the borrower to the Nth degree. If they find that the borrower is not in extreme financial hardship or has spent their money on non-essential things (see above paragraph), they will most likely reject a short-sale. This leaves you, the buyer, without a home and up to several months of your time wasted while waiting for a response.
Overall, short-sales are giving many buyers a false sense 0f "I can get a great deal and without many headaches". That's not entirely true. Unless you have a lot of time, patience and energy to deal with a short-sale, stick with bank-owned properties, relocation company owned properties and "regular" resales.
For more information, statistics and resources on the Loudoun County, VA real estate market, check out LoudounStats.com and LoudounForeclosures.com.