SHORT SALES GOING TO FORECLOSURE
Buyers in the suburban Maryland real estate market are attracted to short sale listings because of the low listing prices and the opportunities for bargain purchases. These are transactions that require approval by the lenders because the sales proceeds will be less than the mortgage balances. Yes, deals can be found but buyers should know that only a small percentage of short sales contracts actually reach settlement.
What are the risks? It can take a lot of time and effort to get a short sale to settlement. If the buyers have a tight time frame, they may wish to pass on short sales. Frustration and disappointment can also be the result when the lenders do not respond or do not approve the sales. Buyers should try to avoid the financial risks by being very selective when they make offers and confirm the status of the mortgage payments that are due on the property.
A good percentage of the trustee sales that are advertised are also active listings on the multiple listing service. If the property is sold at a trustee sale auction at the court house entrance, any pre-existing contracts will be voided. We see examples of these risks all of the time. I just selected a random home that is advertised by Alex Cooper Auctioneers www.alexcooper.com for a trustee sale auction on March 4, 2009 at 10:40 AM. 11929 APPALOOSA WAY, NORTH POTOMAC, MD 20878 is listed as a short sale and the home is under contract. I do not know if the buyer or agent knows about the pending trustee sale but hopefully they do know and will have a settlement before the foreclosure.
221 AMBERLEIGH DR, SILVER SPRING, MD 20905 is an active listing at $534,900 on MRIS. However, there is no mention in the listing of the trustee sale that is scheduled on March 4, 2009 at 2:52 PM. Is this a material fact that should be disclosed?
How do you protect yourself as a purchaser? Short sale purchasers should ask their buyer agents to alert them if the property is advertised for a trustee sale. Trustee sales are advertised for three weeks before the date of the sale. Better yet, ask for proof of the mortgage payments during while the contrat is pending.
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