Should you focus only on Short Sales?
Tom Burland Realtor-Coldwell Banker - www.Ct-Shore-Homes.com tom.burland@cbmoves.com
In a recent conversation with a client looking for a home in Madison Ct, they mentioned they wanted to search solely for Short Sale and Foreclosures. When I aske why, they said those are the bargins in the market. While true that many of these represent an opportunity to get a good value, it should not be the only focus.
My explaination to the client was that this approach could overlook some great values on the market. The best example I could come up with was the following:
Two home owners purchased their homes at the same time 2 years ago, both paid $325,000 for the house and both houses were identical in every way. Homeowner A put $200,000 down and held a a $125,000 mortgage. Homeowner B put $25,000 down and financed $300,000.
Recently both put their homes on the market at $290,000. Homeowner A's home is a traditional sale and Homeowner B's home is a Short Sale. Why is Home B a better value?
In addition there are additional approvals steps for an offer to be accepted which can cause other opportunities to be passed on and no guarantee that the deal will be accepted.
Point being, don't just focus on short sales, keep them in the mix but look for values. Also remember that value can be viewed as total cost of ownership, including the improvements you will need to make post purchase.
Tom
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Tom, once they go through their first "Short Sale" transaction they will not be in a hurry to do another one. Nothing short about a Short Sales and they are very long on frustration.
Most Short Sales that I have seen come in pretty close to the appraised value. So if you are still paying close to what the house is worth, why would anyone want to put themselves through that ringer.